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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
January 29, 1996
MEDITRUST
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(Exact name of registrant as specified in charter)
Massachusetts 0-14022 04-6532031
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(State of (Commission (I.R.S. Employer
Incorporation) File No.) Identification No.)
197 First Avenue, Needham, Massachusetts 02194
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 433-6000
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Item 5. OTHER EVENTS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
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YEAR ENDED DECEMBER 31, 1995 VS. YEAR ENDED DECEMBER 31, 1994
Revenues for the year ended December 31, 1995 were $209,369,000
compared to $172,993,000 for the year ended December 31, 1994, an increase of
$36,376,000 or 21%. Revenue growth resulted from increased interest income of
$32,823,000 and increased rental income of $3,553,000, resulting primarily from
additional real estate investments made during the past year.
For the year ended December 31, 1995, total expenses decreased by
$3,136,000. Interest expense decreased by $3,316,000 primarily due to lower
interest rates on newly issued notes which were used to prepay senior unsecured
notes payable and senior mortgage notes payable, which carried higher interest
rates. Depreciation and amortization increased by $1,005,000, as a result of
increased real estate investments. General and administrative expenses
decreased by $825,000.
YEAR ENDED DECEMBER 31, 1994 VS. YEAR ENDED DECEMBER 31, 1993
Revenues for the year ended December 31, 1994 were $172,993,000
compared to $150,375,000 for the year ended December 31, 1993, an increase of
$22,618,000 or 15%. Revenue growth resulted from increased rental income of
$2,059,000 and increased interest income of $20,559,000 resulting primarily
from additional real estate investments made during the past year.
For the year ended December 31, 1994, total expenses increased by
$5,794,000. Interest expense increased by $5,286,000 and resulted from the
issuance of convertible debentures in November 1993 and March 1994 and a higher
level of short-term borrowings during 1994. The increase was partially offset
by the prepayment of senior secured and unsecured debt totaling $23,300,000 and
the conversion of convertible debentures totaling $59,002,000 during 1994.
Depreciation and amortization expense increased by $894,000 and general and
administrative expense decreased by $386,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company provides funding for its investments through a combination
of long-term and short-term financing including both debt and equity. The
Company obtains long-term financing through the issuance of Shares, the
issuance of long-term unsecured notes, the issuance of convertible debentures
and the assumption of mortgage notes. The Company obtains short-term financing
through the use of unsecured notes and bank lines of credit which are replaced
with long-term financing as appropriate. From time to time, the Company may
utilize interest rate
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caps or swaps to hedge interest rate volatility. It is the Company's objective
to match mortgage and lease terms with the terms of its borrowings. The
Company seeks to maintain an appropriate spread between its borrowing costs and
the rate of return on its investments. When development loans convert to
sale/leaseback transactions or permanent mortgage loans, the base rent or
interest rate, as appropriate, is fixed at the time of such conversion.
In April 1995, the Company completed the sale of 9,250,000 Shares at
$30.125 per Share. The net proceeds to the Company from this offering were
used to repay short-term borrowings and for investments in additional health
care facilities.
On July 26, 1995, the Company completed the sale of $125 million of
7.375% Notes due July 15, 2000 and $80 million of 7.6% Notes due July 15, 2001.
The 7.375% Notes were priced at 99.82% to yield 7.418% and the 7.6% Notes were
priced at 99.948% to yield 7.61%. The Company used the net proceeds to repay
higher cost indebtedness.
On July 28, 1995, the Company completed the sale of $43,334,000 of
8.54% Series A convertible senior notes due July 1, 2000 and $51,666,000 of
8.56% Series B convertible senior notes due July 1, 2002. These notes are
convertible into Shares of beneficial interest of the Company at $32.625 per
Share. The Company used the net proceeds of the offering to repay higher cost
indebtedness.
In July and August 1995, the Company prepaid senior unsecured notes
and senior mortgage notes payable of $296,800,000 which were due between 1995
and 2001, with interest rates ranging from 10.00% to 10.86%. The transaction
resulted in prepayment penalties and acceleration of unamortized debt costs
totaling $33,454,000, which is an extraordinary item reflected as a loss from
prepayment of debt in the accompanying income statement. Net proceeds from the
issuance of approximately $300 million of notes and convertible debentures with
interest rates ranging from 7.375% to 8.56% were used for the prepayment. The
Company will gain flexibility from the elimination of certain operational
covenants and benefit from lower interest rates and improved interest coverage
ratios.
On August 10, 1995, the Company commenced a Medium-Term Note program,
offering on a continuing basis, notes due from nine months to 30 years from
date of issue, as selected by the purchaser and agreed to by the Company at an
aggregate initial public offering price not to exceed $200 million. During
August and September $98,500,000 of these notes were issued and in January
1996, an additional $40,000,000 were issued with maturity dates ranging from
January 17, 1997 to August 17, 2015, bearing interest at rates between 6.35%
to 8.625%. The net proceeds were utilized to reduce the outstanding balance of
the Company's unsecured credit facilities.
In November 1995, the Company completed the sale of 1,000,000 Shares
at $33.00 per Share. The net proceeds to the Company from this offering were
used to repay short-term borrowings and for investments in additional health
care facilities.
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As of December 31, 1995, the Company's gross real estate investments
totaled approximately $1,855,000,000 consisting of 247 long-term care
facilities, 24 rehabilitation hospitals, 14 medical office buildings, ten
alcohol and substance abuse treatment facilities and psychiatric hospitals,
seven retirement and assisted living facilities, and one acute care hospital
campus. As of December 31, 1995, the Company's outstanding commitments for
additional financing totaled approximately $102,701,000 for the completion of
17 facilities under construction and additions to permanent mortgages secured
by five long-term care facilities.
The Company had shareholders' equity of $1,061,755,000 and debt
constituted 42% of the Company's total capitalization as of December 31, 1995.
As of January 29, 1996, the Company has an unsecured revolving line of
credit expiring June 30, 1997 in the amount of $205,000,000 bearing interest
at the lender's prime rate (8.5%) or LIBOR plus 1.00% (6.5625% at January 22,
1996), and an unsecured short-term borrowing expiring April 1, 1996 in the
amount of $25,000,000 bearing interest at LIBOR plus 1.25% (6.8125% at
January 22, 1996). A total of approximately $69,000,000 was available at
January 29, 1996. In addition, the Company has effective shelf registrations
on file with the Securities and Exchange Commission under which the Company
may issue up to approximately $394,000,000 of securities including debt,
convertible debt and shares of beneficial interest.
The Company believes that its various sources of capital are adequate
to finance its operations as well as pending property acquisitions, mortgage
financings and future dividends. For 1996, however, in the event that the
Company identifies appropriate investment opportunities, the Company may raise
additional capital through the sale of shares of beneficial interest or by the
issuance of additional long-term debt.
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit No. Description
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23 Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule
99 Consolidated Financial Statements of Meditrust as of
December 31, 1995 and 1994 and for the years ended December
31, 1995, 1994 and 1993
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 hereunto duly authorized.
MEDITRUST
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January 29, 1996 /s/ Lisa P. McAlister
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Lisa P. McAlister
Vice President and Treasurer
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