1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
(Mark One)
[X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1996 or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from_______ to__________
Commission file number: 0-14022
MEDITRUST
(Exact name of registrant as specified in its charter)
Massachusetts 04-6532031
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
197 First Avenue, Needham Heights, MA. 02194-9127
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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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Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
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Shares of Beneficial Interest without par value New York Stock Exchange
9% Convertible Debentures due 2002 New York Stock Exchange
7% Convertible Debentures due 1998 New York Stock Exchange
7 1/2% Convertible Debentures due 2001 New York Stock Exchange
8.54% Convertible Debentures due 2000 New York Stock Exchange
8.56% Convertible Debentures due 2002 New York Stock Exchange
Medium-Term Notes due from 1999 to 2015 New York Stock Exchange
7.82% Notes due September 10, 2026 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 x No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K__.
Aggregate market value of voting shares held by non-affiliates as of
January 31, 1997: $2,365,612,000 Number of Shares of Beneficial Interest
outstanding of registrant as of January 31, 1997: 61,444,463 The following
documents are incorporated by reference into the indicated Part of this
Form 10-K.
Document Part
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Definitive Proxy Statement for the May 7, 1997 Annual Meeting of
Shareholders, to be filed pursuant to Regulation 14A III
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PART I
ITEM 1.
BUSINESS
GENERAL
Unless otherwise specified, information regarding Meditrust's business is
given as of December 31, 1996.
Meditrust (the "Company"), a real estate investment trust organized on
August 6, 1985, invests primarily in the health care industry in locations
throughout the United States and also invests in other entities which invest in
similar facilities outside of the United States. The objective of the Company is
to enable shareholders to participate in the investment in health care related
facilities held primarily for the production of income to be distributed to
shareholders. In meeting this objective, the Company invests in high quality
facilities that are managed by experienced operators and achieves diversity in
its property portfolio by sector of the health care industry, geographic
location, operator and form of investment.
The Company was organized to qualify, and intends to continue to operate,
as a real estate investment trust in accordance with federal tax laws and
regulations. So long as the Company so complies, with limited exceptions, the
Company will not be taxed under federal income tax laws on that portion of its
taxable income that it distributes to its shareholders. The Company has
distributed, and intends to continue to distribute, substantially all of its
real estate investment trust taxable income to shareholders.
As of December 31, 1996, the Company had investments in 408 facilities,
consisting of 274 long-term care facilities, 84 retirement and assisted living
facilities, 26 rehabilitation hospitals, 17 medical office buildings, six
alcohol and substance abuse and psychiatric facilities, and one acute care
hospital campus. Included in the 408 facilities are 42 properties under
construction which are expected to be completed during the next 12 to 18 months.
The Company's investments take the form of permanent mortgage loans,
sale/leaseback transactions and development projects. Generally, the Company
enters into development projects where, upon completion of the facility, the
Company's development funding is to be replaced by either a permanent mortgage
loan or a sale/leaseback transaction with the Company.
The Company's net increase in gross real estate investments totaled
$431,158,000 during 1996 as a result of the Company entering into sale/leaseback
transactions and making permanent mortgage loans and providing development
financing. Total gross investments were $2,286,160,000 at December 31, 1996.
SALE/LEASEBACK TRANSACTIONS. The Company acquired 45 assisted living
facilities in California, Florida, Idaho, Kansas, Massachusetts, Oklahoma,
Pennsylvania, South Carolina, Texas, Washington and Wisconsin and 13 long-term
care facilities in Florida, Indiana, New Hampshire, New Jersey and Ohio for
$243,034,000. The Company also provided net funding of $82,755,000 for the
construction of 21 assisted living facilities in Arkansas, Florida, Idaho,
Kansas, Mississippi, Pennsylvania, South Carolina, Tennessee, Texas and
Washington and one medical office building in Florida. In addition, the Company
received proceeds of $4,701,000 from the sale of one rehabilitation facility in
New York.
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PERMANENT MORTGAGE LOANS. During 1996, the Company provided permanent
mortgage financing of $137,686,000 for 29 long-term care facilities located in
California, Colorado, Idaho, Missouri, New Mexico, New York, Rhode Island and
Washington; 11 assisted living facilities located in Michigan, Ohio and
Wisconsin and one retirement living facility located in North Carolina.
The Company also funded $9,903,000 of increases to existing permanent
mortgage financing secured by eight long-term care facilities located in
Connecticut, Indiana, Massachusetts, Nevada and Washington and one assisted
living facility in Michigan.
DEVELOPMENT FINANCING. During 1996, the Company provided new construction
financing of $59,862,000 relating to five long-term care facilities in Florida,
Idaho, Massachusetts, Nevada and New Jersey; four assisted living facilities in
Indiana and Michigan; and five medical office buildings in Arizona, Florida and
Texas. The Company also provided $57,633,000 for on-going construction of
facilities already in development prior to 1996.
OTHER TRANSACTIONS. During the year ended December 31, 1996, the Company
received principal payments on real estate mortgages of $33,962,000 and received
$128,285,000 in mortgage prepayments for 21 facilities located in Arizona,
Connecticut, Michigan, New Jersey, North Carolina and Pennsylvania.
CONVERSION OF DEVELOPMENT FINANCING TO SALE/LEASEBACK TRANSACTIONS. During
1996, the Company provided development financing and completed construction of
three assisted living facilities in Florida for $7,676,000.
CONVERSION OF DEVELOPMENT FINANCING TO PERMANENT MORTGAGE LOANS. During
1996, the Company provided on-going development financing of $27,136,000, which
resulted in the completion of construction of three long-term care facilities in
Idaho and Massachusetts and eight medical office buildings in Connecticut and
Florida. Total aggregate funding of these projects was $96,099,000.
OTHER INVESTMENTS. On July 25, 1996, the Company invested approximately
$13,509,000 in exchange for 7,936,000 shares of common stock, representing a
19.99% interest in Nursing Home Properties Plc (NHP Plc), a property investment
group which specializes in the financing, through sale and leaseback
transactions, of nursing homes located in the United Kingdom. The Company does
not have the right to vote more than 9.99% of the shares of NHP Plc. As of
December 31, 1996, NHP Plc had invested or committed to invest approximately
$163,000,000 in 52 nursing homes, totaling 2,923 beds.
As of December 31, 1996 the market value of this investment was $16,037,000
and is included in other assets in the Company's financial statements. The
resulting difference between the current market value and cost, $2,528,000, is
included in shareholders' equity in the Company's financial statements.
CAPITAL RAISING TRANSACTIONS. On January 16, 1996, the Company issued an
unsecured note in the aggregate principal amount of $20 million which matures in
January 2006 and bears interest at the annual rate of 7.3%.
During February 1996, the Company completed the sale of 9,200,000 Shares at
$34.00 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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On September 10, 1996, the Company completed the sale of $175,000,000 of
7.82% notes due September 10, 2026. The notes include a put feature which gives
each noteholder the right to redeem the notes at par on September 10, 2003. The
net proceeds from the issuance of these securities were utilized to repay the
outstanding balance of the Company's unsecured credit facilities and for
investments in additional health care facilities.
During the twelve months ended December 31, 1996, $3,416,000 of principal
amount of 9% convertible debentures were converted into 126,507 Shares and
$12,550,000 of principal amount of 7% convertible debentures were converted into
409,787 Shares.
The Company has a total of $280,000,000 in unsecured credit facilities
consisting of unsecured revolving lines ("Lines") of credit. Both Lines bear
interest at the lender's prime rate or LIBOR plus .875%. One of the Lines
totaling $230,000,000 expires September 23, 1999 and the other, totaling
$50,000,000, expires December 12, 1999. A total of approximately $259,000,000
was available under the Company's Lines at January 27, 1997.
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. During 1997, as the Company identifies
appropriate investment opportunities, the Company may raise additional capital
through the sale of Shares or Preferred Shares, by the issuance of additional
long-term debt or through a securitization transaction.
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INVESTMENT AND OTHER POLICIES
GENERAL
The Company invests in income-producing health care related facilities
which may include long-term care facilities, rehabilitation hospitals,
retirement and assisted living facilities, medical office buildings, alcohol and
substance abuse treatment facilities, psychiatric hospitals, and other health
care related facilities. The Company also invests in other entities which invest
in similar facilities outside the United States. These investments are made
primarily for the production of income. Because the Company invests in health
care related facilities, the Company is not in a position to diversify its
investment portfolio to include assets selected to reduce the risks associated
with investment in improved real estate in a single industry. The Company
intends to continue to diversify its portfolio by broadening its geographic
base, providing financing to more operators, diversifying the type of health
care facilities in its portfolio and diversifying the types of financing methods
provided.
In evaluating potential investments, the Company considers such factors as:
(1) the current and anticipated cash flow and its adequacy to meet operational
needs and other obligations and to provide a competitive market return on equity
to the Company's shareholders; (2) the geographic area, type of property and
demographic profile; (3) the location, construction quality, condition and
design of the property; (4) the potential for capital appreciation, if any; (5)
the growth and regulatory environment of the communities in which the properties
are located; (6) occupancy and demand for similar health care facilities in the
same or nearby communities; (7) an adequate mix of private and
government-sponsored patients; (8) potential alternative uses of the facilities;
and (9) prospects of liquidity through financing or refinancing.
Management reviews and verifies market research for all potential
investments on behalf of the Company. Management also reviews the value of the
property, the interest rates and debt service coverage requirements of any debt
to be assumed and the anticipated sources of repayment for such debt.
The Company's Declaration of Trust places no limitations on the percentage
of the Company's total assets that may be invested in any one property or joint
venture or on the nature or identity of the operators of such properties. The
independent Trustees of the Company, however, may establish such limitations as
they deem appropriate from time to time.
From time to time, the Company enters into senior debt transactions. The
Company has no current plans to underwrite securities of other issuers. The
Company has authority to offer Shares in exchange for investments which conform
to its standards and to repurchase or otherwise acquire its Shares or other
securities. The Company has no present plans to invest in the securities of
others for the purpose of exercising control, although the Company owns
interests in partnerships which own health care facilities and a property
investment group in the United Kingdom which invests in health care facilities.
The Company makes loans on such terms as the Trustees may approve.
The Company will not, without the prior approval of a majority of Trustees,
including a majority of the independent Trustees of the Company, acquire from or
sell to any Trustee, director, officer or employee of the Company, or any
affiliate thereof, any of the assets or other property of the Company.
The Company provides its shareholders on request with annual reports
containing audited financial statements and quarterly reports containing
unaudited financial information.
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REINVESTMENT OF SALES PROCEEDS
In the event the Company sells or otherwise disposes of any of its
properties, the independent Trustees will determine whether and to what extent
the Company will acquire additional properties or distribute the proceeds to the
shareholders.
SHORT-TERM INVESTMENTS
The Company invests its cash in certain short-term investments during
interim periods between the receipt of revenues and distributions to
shareholders. Cash not invested in facilities may be invested in
interest-bearing bank accounts, certificates of deposit, short-term money-market
securities, short-term United States government securities, mortgage-backed
securities guaranteed by the Government National Mortgage Association, mortgages
insured by the Federal Housing Administration or guaranteed by the Veterans
Administration, mortgage loans, mortgage loan participations, and certain other
similar investments. The Company's ability to make certain of these investments
may be limited by the Company's borrowing agreements and by tax considerations.
The Company's return on these short-term investments may be more or less than
its return on real estate investments.
BORROWING POLICIES
The Company may incur additional indebtedness when, in the opinion of the
Trustees, it is advisable. For short-term purposes, the Company may, from time
to time, negotiate lines of credit, arrange for other short-term borrowings from
banks or others or issue commercial paper. The Company may arrange for long-term
borrowing from banks, insurance companies, public offerings or private
placements to institutional investors. Under the Company's Declaration of Trust
and under documents pertaining to certain existing indebtedness, the Company is
subject to various restrictions with respect to borrowings. See "Prohibited
Investments and Activities."
In addition, the Company may incur mortgage indebtedness on real estate
which it has acquired through purchase, foreclosure or otherwise. When terms are
deemed favorable, the Company may invest in properties subject to existing loans
or mortgages. The Company also may obtain financing for unleveraged properties
in which it has invested or may refinance properties acquired on a leveraged
basis. There is no limitation on the number or amount of mortgages which may be
placed on any one property, but overall restrictions on mortgage indebtedness
are provided under documents pertaining to certain existing indebtedness.
PROHIBITED INVESTMENTS AND ACTIVITIES
The Declaration of Trust prohibits the Company from engaging in any
investment practices or activities that would disqualify the Company as a real
estate investment trust under the provisions of the Internal Revenue Code.
In addition to prohibitions and restrictions imposed by the Declaration of
Trust, there are and may be, from time to time, additional restrictions imposed
by debt instruments or other agreements entered into by the Company.
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POLICY CHANGES
The Declaration of Trust may not be changed by the Trustees without
shareholder approval except in limited circumstances to comply with federal and
state law. All other policies set forth herein may be changed by the Trustees
without shareholder approval.
COMPETITION
The Company competes, primarily on the basis of knowledge of the industry,
economics of the transaction and flexibility of financing structure, with real
estate partnerships, other real estate investment trusts, banks and other
investors generally in the acquisition, leasing and financing of health care
related facilities.
The operators of the facilities compete on a local and regional basis with
other operators of comparable facilities. They compete with independent
operators as well as companies managing multiple facilities, some of which are
substantially larger and have greater resources than the operators of the
Company's facilities. Some of these facilities are operated for profit while
others are owned by governmental agencies or tax-exempt not-for-profit
organizations.
EMPLOYEES
As of December 31, 1996, the operations of the Company were maintained by
40 employees. The Company has not experienced any significant labor problems and
believes that its employee relations are good.
DECLARATION OF TRUST
The Declaration of Trust of the Company provides that shareholders of the
Company shall not be subject to any liability for the acts or obligations of the
Company and that, as far as is practicable, each written agreement of the
Company is to contain a provision to that effect. No personal liability will
attach to the shareholders for claims under any contract containing such a
provision in writing where adequate notice is given of such provision, except
possibly in a few jurisdictions. With respect to all types of claims in such
jurisdictions and with respect to tort claims, contract claims where the
shareholder liability is not disavowed as described above, claims for taxes and
certain statutory liabilities in other jurisdictions, a shareholder may be held
personally liable to the extent that claims are not satisfied by the Company.
However, the Declaration of Trust provides that, upon payment of any such
liability, the shareholder will be entitled to reimbursement from the general
assets of the Company. The Trustees intend to conduct the operations of the
Company, with the advice of counsel, in such a way as to avoid, as far as is
practicable, the ultimate liability of the shareholders of the Company. The
Trustees do not intend to provide insurance covering such risks to the
shareholders.
GOVERNMENT REGULATION
The Company recognizes a portion of revenue from percentage, supplemental
and/or additional rent or interest. This revenue can be a contractual amount or
be based on the health care facility operator's gross revenues, which, in most
cases, is subject to changes in the reimbursement and licensure policies of
federal, state and local governments. In addition, the acquisition of health
care facilities is generally subject to state and local regulatory approval.
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MEDICARE, MEDICAID, BLUE CROSS AND OTHER PAYORS
Certain of the operators receive payments for patient care from federal
Medicare programs for elderly and disabled patients, state Medicaid programs for
medically indigent and cash grant patients, private insurance carriers,
employers and Blue Cross plans, health maintenance organizations, preferred
provider organizations and directly from patients. In general, Medicare payments
for long-term care services, psychiatric care, and rehabilitative care are based
on allowable costs plus a return on equity for proprietary facilities. Payments
from state Medicaid programs for psychiatric care are based on reasonable costs
or are at fixed rates. Long-term care facilities are generally paid by the
Medicaid programs at fixed rates. Most Medicare and Medicaid payments are below
retail rates. Payments from other payors are generally also below retail rates.
Blue Cross payments in different states and areas are based on costs, negotiated
rates or retail rates.
LONG-TERM CARE FACILITIES
Regulation of long-term care facilities is exercised primarily through the
licensing of such facilities. The particular agency having regulatory authority
and the license qualification standards vary from state to state and, in some
instances, from locality to locality. Licensure standards are constantly under
review and undergo periodic revision. Governmental authorities generally have
the power to review the character, competence and community standing of the
operator and the financial resources and adequacy of the facility, including its
plant, equipment, personnel and standards of medical care. Long-term care
facilities are certified under the Medicare program and all are eligible to
qualify under state Medicaid programs, although not all participate in the
Medicaid programs.
REHABILITATION HOSPITALS
Rehabilitation hospitals are also subject to extensive federal, state and
local legislation and regulation. Rehabilitation hospitals are subject to
periodic inspections and licensure requirements. Inpatient rehabilitation
facilities are cost-reimbursed, receiving the lower of reasonable costs or
reasonable charges. Typically, the fiscal intermediary pays a set rate per day
based on the prior year's costs for each facility. Annual cost reports are filed
with the operator's fiscal intermediary and adjustments are made, if necessary.
MEDICAL OFFICE BUILDINGS
The individual physicians, groups of physicians and health care providers
which occupy medical office buildings are subject to a variety of federal, state
and local regulations applicable to their specific areas of practice. Since
medical office buildings may contain numerous types of medical services, a wide
variety of regulations may apply. In addition, medical office buildings must
comply with the requirements of municipal building codes, health codes and local
fire departments.
ACUTE CARE HOSPITALS
Acute care hospitals are subject to extensive federal, state and local
legislation and regulation relating to among other things the adequacy of
medical care, equipment, personnel, hygiene, operating policies and procedures,
fire prevention, rate-setting and compliance with building codes and
environmental protection laws. Hospitals must maintain strict standards in order
to obtain their state hospital licenses from a department of health or other
applicable agency in each state. In granting and renewing licenses, a department
of health considers, among other things, the physical buildings and
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equipment, the qualifications of the administrative personnel and nursing staff,
the quality of care and continuing compliance with the laws and regulations
relating to the operation of the facilities. State licensing of facilities is a
prerequisite to certification under the Medicare and Medicaid programs. Various
other licenses and permits also are required in order to dispense narcotics,
operate pharmacies, handle radioactive materials and operate certain equipment.
Hospital facilities are subject to periodic inspection by governmental and other
authorities to assure continued compliance with the various standards necessary
for their licensing and accreditation.
RETIREMENT AND ASSISTED LIVING
Residential communities such as retirement and assisted living facilities
are subject to varying degrees of regulation and licensing by local and state
health and social service agencies, and other regulatory authorities specific to
their location. Typically these regulations and licensing requirements relate to
fire safety, sanitation, staff training, staffing levels and living
accommodations and include requirements specific to certain health related
services offered. Levels of service provided and corresponding regulation vary
considerably from operator to operator as some of the residential communities
are similar to long-term care facilities, while others fall into the relatively
unregulated care of a retirement community.
ALCOHOL AND SUBSTANCE ABUSE TREATMENT FACILITIES
Alcohol and substance abuse treatment facilities must comply with the
licensing requirements of federal, state and local health agencies and with the
requirements of municipal building codes, health codes and local fire
departments. In granting and renewing a facility's license, a state health
agency considers, among other things, the physical buildings and equipment, the
qualifications of the administrative personnel and health care staff, the
quality of nursing and other services and the continuing compliance of such
facility with the laws and regulations applicable to its operations.
PSYCHIATRIC HOSPITALS
Psychiatric hospitals generally are subject to extensive federal, state and
local legislation and regulation. Licensing for psychiatric hospitals is subject
to periodic inspections regarding standards of medical care, equipment and
hygiene. In addition, there are specific laws regulating civil commitment of
patients and disclosure of information regarding patients being treated for
chemical dependency. Many states have adopted a "patient's bill of rights" which
sets forth standards, such as using the least restrictive treatment, allowing
patient access to the telephone and mail, allowing the patient to see a lawyer
and requiring the patient to be treated with dignity. Insurance reimbursement
for psychiatric treatment generally is more limited than for general health
care.
HEALTH CARE REFORM AND REGULATION
Many of the operators with which the Company does business rely on
government reimbursement, primarily Medicare and Medicaid, for a significant
portion of their operating revenues. During the 1994 session of the United
States Congress, there was active consideration of various proposals for
national health care reform, including the administration's proposal to cap
national health care spending and the future growth of Medicare and Medicaid
funding. Other proposals discussed in the 1995 and 1996 sessions of Congress
included replacement of the current Medicaid program with block grants to the
states and other limitations on Medicaid spending. No such legislation was
passed during the 1994, 1995 or 1996 sessions of Congress. Some of these
proposals, if enacted, could have had an impact on
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operators doing business with the Company. It is not possible to predict whether
and when health care reform legislation will be passed by Congress and, if
passed, what features such legislation will contain or the effect it may have on
the nursing home, assisted living or rehabilitation care industries, the
reimbursement levels available to health care providers or on the health care
industry in general.
From time to time, Medicaid, Medicare and other governmental payors have
reviewed the billing practices of many health care facilities operators
including certain of the operators with which the Company does business. It is
unclear what impact such reviews may have on these operators. The Company does
not believe, however, that any adverse findings against these operators would
materially affect the Company's financial position.
ITEM 2.
PROPERTIES
The table sets forth certain information as of December 31, 1996 regarding
the Company's facilities:
PURCHASE PRICE ANNUAL BASE RENT
NUMBER OF NUMBER OF OR MORTGAGE OR
LOCATION FACILITIES BEDS(1) AMOUNT(2) INTEREST PAYMENT(3)
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(DOLLARS IN THOUSANDS)
LONG-TERM CARE FACILITIES
Alabama 1 230 $ 7,759 $ 940
Arizona 6 1,004 39,185(4) 4,497
California 6 680 24,472(4) 2,488
Colorado 13 1,201 49,484(4) 5,283
Connecticut 16 2,100 117,776(5) 13,798
Florida 12 1,647 121,647(6) 11,875
Georgia 1 155 2,512(4) 270
Idaho 2 100 7,742(7) 749
Illinois 26 2,266 47,999(4) 4,800
Indiana 13 1,709 57,533(8) 5,622
Kansas 3 383 8,633(4) 932
Kentucky 1 228 12,116(4) 1,233
Maryland 1 170 18,188 1,910
Massachusetts 36 5,296 335,554(9) 36,281
Michigan 3 392 15,430(10) 1,855
Missouri 19 2,468 81,480(11) 8,923
Nebraska 3 406 12,342(4) 1,344
Nevada 3 361 21,581(12) 2,220
New Hampshire 6 537 33,135 2,324
New Mexico 1 168 3,221(4) 309
New Jersey 7 1,277 69,952(13) 7,245
New York 5 512 51,342(14) 3,913
North Carolina 1 120 2,074(4) 225
Ohio 7 843 35,217 3,170
Pennsylvania 5 662 26,867(15) 3,200
Rhode Island 2 328 12,923(4) 1,318
Tennessee 9 1,221 48,405(4) 4,077
Texas 47 4,506 109,033(4) 11,338
Utah 2 220 10,063(4) 1,123
Washington 8 822 46,854(4) 4,672
West Virginia 7 615 29,646(16) 2,988
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PURCHASE PRICE ANNUAL BASE RENT
NUMBER OF NUMBER OF OR MORTGAGE OR
LOCATION FACILITIES BEDS(1) AMOUNT(2) INTEREST PAYMENT(3)
- - -------- ---------- ---- --------- -------------------
(DOLLARS IN THOUSANDS)
Long-Term Care, continued
- - -------------------------
Wyoming 2 313 14,318(4) 1,553
--- ------
Various 13,700(25) 1,404
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TOTAL LONG-TERM CARE 274 32,940 1,488,183 153,879
--- ------ --------- -------
ASSISTED LIVING
Arkansas 5 255 3,340 342
California 1 88 4,152 417
Florida 17 1,555 106,994(17) 10,468
Idaho 3 246 12,844 1,276
Indiana 3 183 6,552(18) 672
Kansas 5 231 13,028 1,290
Massachusetts 1 50 5,423 526
Michigan 6 296 19,818(19) 1,984
Mississippi 1 80 2,633 263
Ohio 1 59 4,718(4) 467
Oklahoma 1 26 1,425 140
Pennsylvania 5 239 22,842 2,214
South Carolina 2 231 13,049 1,273
Tennessee 1 50 1,929 192
Texas 15 795 39,256 4,067
Washington 3 198 12,079 1,173
Wisconsin 10 214 8,004(20) 2,362
-- ----- ------- ------
TOTAL ASSISTED LIVING 80 4,796 278,086 29,126
-- ----- ------- ------
REHABILITATION HOSPITALS
Arizona 1 80 9,965 1,196
Arkansas 2 112 17,450 1,442
California 5 299 67,264(21) 7,385
Colorado 1 117 10,750(4) 1,129
Kansas 1 67 11,649 751
Kentucky 1 55 10,000 1,050
Louisiana 3 276 30,670 1,807
Massachusetts 1 86 10,859 1,140
Michigan 1 45 7,821 821
New Hampshire 1 128 13,571 1,344
New Jersey 1 70 14,300 1,501
Tennessee 1 60 8,621(4) 1,078
Texas 5 356 46,137 4,071
Washington 1 52 5,861 615
Wisconsin 1 125 13,888 1,619
-- ----- ------- ------
TOTAL REHABILITATION 26 1,928 278,806 26,949
-- ----- ------- ------
MEDICAL OFFICE BUILDINGS
Arizona 1 5,223(22) 535
California 2 13,052(4) 1,240
Florida 9 44,170(23) 4,232
Tennessee 1 8,028(4) 709
Texas 4 24,554(24) 2,438
-- ------- ------
TOTAL MEDICAL OFFICE
BUILDINGS 17 95,027 9,154
-- ------- ------
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PURCHASE PRICE ANNUAL BASE RENT
NUMBER OF NUMBER OF OR MORTGAGE OR
LOCATION FACILITIES BEDS AMOUNT(2) INTEREST PAYMENT(3)
- - -------- ---------- ---- --------- -------------------
(DOLLARS IN THOUSANDS)
ACUTE CARE HOSPITAL
Arizona 1 492 65,650 7,222
--- --- ---------- -----
RETIREMENT LIVING FACILITIES
Colorado 1 220 15,592(4) 1,676
Florida 1 184 11,500(4) 1,150
North Carolina 1 190 5,468(4) 483
Utah 1 287 9,112(4) 993
--- --- ---------- -----
TOTAL RETIREMENT LIVING 4 881 41,672 4,302
--- --- ---------- -----
PSYCHIATRIC HOSPITALS AND
ALCOHOL AND SUBSTANCE ABUSE
California 1 61 5,750 719
Florida, New York and Oklahoma 5 564 32,986(4) 3,628
--- --- ---------- -----
TOTAL PSYCHIATRIC AND
ALCOHOL AND SUBSTANCE
ABUSE 6 625 38,736 4,347
--- --- ---------- -----
TOTAL ALL FACILITIES(26) 408 $2,286,160
=== ==========
Other Health Care Investments
- - -----------------------------
During 1996, the Company invested approximately $13,509,000 in exchange for
7,936,000 Shares, representing 19.99% of Nursing Home Properties Plc (NHP Plc),
a property investment group which specializes in the financing, through sale and
leaseback transactions, of nursing homes located in the United Kingdom. The
Company does not have the right to vote more than 9.99% of the shares of NHP
Plc. As of December 31, 1996, NHP Plc had invested or committed to invest
approximately $163,000,000 in 52 nursing homes, totaling 2,923 beds. The
facilities are leased to 11 nursing home operators in the United Kingdom with
terms and conditions similar to those contained in the Company's leases.
(1) Based upon information provided by the operators of the facilities, the
average occupancy of the Company's portfolio of operating facilities,
including start-up facilities, for the nine months ended September 30,
1996, was as follows: long-term care facilities, 84%; rehabilitation
hospitals, 70%; alcohol and substance abuse treatment facilities, 72%;
assisted living, 86%; retirement living facilities, 92%; acute care
hospitals 51%. Generally, average occupancy rates are determined by
dividing the number of patient days in each period by the average number of
licensed bed days during such period.
(2) Represents purchase price or mortgage amount at December 31, 1996 for
operating facilities and the funded loan amounts for facilities under
construction.
(3) The annual base rentals/interest payments under the leases or mortgages are
generally projected to be approximately 9% - 13% of the purchase price or
mortgage amount, in accordance with the terms of the respective agreements.
Base rent excludes additional and percentage rent and interest. Additional
and percentage rent and interest for the year ended December 31, 1996 was
an aggregate of $11,409,000 for all of the facilities. Additional and
percentage rent and interest are
-12-
13
calculated based upon a percentage of a facility's revenues over an agreed
upon base amount or an automatic annual escalation.
(4) Permanent mortgage loans.
(5) Includes permanent mortgage loans aggregating $38,567,000.
(6) Includes a permanent mortgage loan of $35,486,000 and a construction loan
of $5,382,000.
(7) Includes a permanent mortgage loan of $5,497,000 and a construction loan of
$2,245,000.
(8) Includes permanent mortgage loans of $44,011,000.
(9) Includes permanent mortgage loans of $167,748,000 and construction loans of
$19,689,000.
(10) Includes a permanent mortgage loan of $7,946,000.
(11) Includes permanent mortgage loans of $72,682,000.
(12) Includes permanent mortgage loans of $18,213,000 and a construction loan of
$3,368,000.
(13) Includes a permanent mortgage loan of $3,203,000 and a construction loan of
$12,861,000.
(14) Includes a permanent mortgage loan of $516,000.
(15) Includes a permanent mortgage loan of $8,852,000 and a construction loan of
$6,483,000.
(16) Includes permanent mortgage loans of $12,446,000.
(17) Includes a construction loan of $19,428,000.
(18) Includes construction loans of $6,552,000.
(19) Includes a permanent mortgage loan of $4,682,000 and a construction loan of
$1,531,000.
(20) Includes a permanent mortgage loan of $5,046,000.
(21) Includes a permanent mortgage loan of $28,275,000.
(22) Includes a construction loan of $5,223,000.
(23) Includes permanent mortgage loans of $35,710,000 and construction loans of
$8,460,000.
(24) Includes permanent mortgage loans of $10,494,000 and construction loans of
$14,060,000.
(25) Includes a line of credit of up to $15,000,000 of which $13,700,000 has
been drawn. The amount outstanding is cross-collateralized by affiliated
facilities of the operator.
-13-
14
(26) Investments by the Company in facilities operated by Sun Healthcare Group,
Inc., Life Care Centers of America, Inc., Emeritus Corporation, Horizon/CMS
Inc., Springwood/Chur Associates, and Health Asset Realty Trust,
represented 17%, 22%, 7%, 6%, 5% and 5%, respectively, of the Company's
total portfolio as of December 31, 1996.
LONG-TERM CARE FACILITIES. The long-term care facilities offer restorative,
rehabilitative and custodial nursing care for patients not requiring the more
extensive and sophisticated treatment available at acute care hospitals. The
facilities are designed to provide custodial care and to supplement hospital
care and many have transfer agreements with one or more acute care hospitals.
ASSISTED LIVING FACILITIES. The assisted living facilities provide a
combination of housing, supportive services, personalized assistance and health
care designed to respond to individual needs for daily living and instrumental
activities. Support services are generally available 24 hours a day to meet
scheduled and unscheduled needs.
RETIREMENT LIVING FACILITIES. The retirement living facilities offer
specially designed residential units for active and ambulatory elderly residents
and provide various ancillary services. They may contain nursing facilities to
provide a continuum of care. The retirement living facilities offer their
residents an opportunity for an independent lifestyle with a range of social and
health services.
REHABILITATION HOSPITALS. The rehabilitation hospitals provide treatment to
restore physical, psycho-social, educational, vocational and economic usefulness
and independence to disabled persons. Rehabilitation concentrates on physical
disabilities and impairments and utilizes a coordinated multidisciplinary team
approach to help patients attain measurable goals.
MEDICAL OFFICE BUILDINGS. Medical office building facilities contain
individual physician, physician group and other health care provider offices for
the administration and treatment of patients, usually in close proximity to the
general service acute care hospital to which the physicians are affiliated. The
types of services provided in a medical office building may include outpatient
therapy, clinics, examination facilities and the provision of other medical
services in a non-hospital setting.
ACUTE CARE HOSPITALS. Acute care hospitals provide services that include,
among others, general surgery, internal medicine, obstetrics, emergency room
care, radiology, diagnostic services, coronary care, pediatric services and
psychiatric services. On an outpatient basis, the services include, among
others, same day surgery, diagnostic radiology (e.g. magnetic resonance imaging,
CT scanning, X-ray), rehabilitative therapy, clinical laboratory services,
pharmaceutical services and psychiatric services.
ALCOHOL AND SUBSTANCE ABUSE TREATMENT FACILITIES. These facilities provide
inpatient treatment for alcohol and substance abuse, including medical
evaluation, detoxification and rehabilitation. Specialized programs offer
treatment for adults, adolescents, families and chronic abusers.
PSYCHIATRIC HOSPITALS. The psychiatric hospitals offer comprehensive,
multidisciplinary adult, adolescent and substance abuse psychiatric programs.
Patients are evaluated upon admission and an individualized treatment plan is
developed. Elements of the treatment plan include individual, group and family
therapy, activity therapy, educational programs and career and vocational
planning.
-14-
15
LEASES
Each facility (which includes the land, buildings, improvements, related
easements, and rights and fixtures (the "Leased Properties")) that is owned by
the Company is leased pursuant to a long-term triple net lease (collectively,
the "Leases") which generally contains terms as outlined below. Generally, the
Leased Properties do not include major movable equipment.
The Leases generally have a fixed term of approximately 10 years and
contain multiple renewal options. Some Leases are subject to earlier termination
upon the occurrence of certain contingencies described in the Lease.
The Company's Leased Properties aggregated approximately $1,104,342,000 of
gross real estate investments at December 31, 1996. The base rents range from
approximately 9% to 13% per annum of the Company's equity investment in the
Leased Properties. The base rents for the renewal periods are generally fixed
rents for the initial renewal periods and can be fixed or at market rates for
later renewal periods. All Leases provide for either an automatic fixed annual
rent escalation or additional variable rents in addition to the base rent, based
on revenues exceeding specified base revenues. The Company typically also
charges a lease commitment fee at the initiation of the sale/leaseback
transaction.
Each Lease is a triple net lease requiring the lessee to pay rent and all
additional charges incurred in the operation of the Leased Property. The lessees
are required to repair, rebuild and maintain the Leased Properties.
The obligations under the Leases are generally guaranteed by the parent
corporation of the lessee, if any, or affiliates or individual principals of the
lessee. Some obligations are further backed by letters of credit, cash
collateral or pledges of certificates of deposit from various financial
institutions which may cover up to one full year's lease payments and which
remain in effect until the expiration of a fixed time period or the fulfillment
of certain performance criteria.
The Company also obtains other credit enhancement devices similar to those
it may obtain with respect to permanent mortgage loans. See "Permanent Mortgage
Loans" for description.
With respect to two of the facilities, the Company leases the land pursuant
to ground leases and in turn subleases the land to the operator of the facility.
Such subleases contain terms substantially similar to those found in the Leases.
PERMANENT MORTGAGE LOANS
The Company's permanent mortgage loan program is comprised of secured loans
which are structured to provide the Company with interest income, additional
interest based upon the revenue growth of the operating facility or a fixed rate
increase, principal amortization and commitment fees. Virtually all of the
approximately $1,181,818,000 of permanent mortgage loans as of December 31, 1996
are first mortgage loans.
The interest rates on the Company's investments in permanent mortgage loans
for operating facilities range from approximately 9% to 13% per annum on the
outstanding balances. The yield to the Company on permanent mortgage loans
depends upon a number of factors, including the stated interest rate, average
principal amount outstanding during the term of the loan, the amount of the
commitment fee charged at the inception of the loan, the interest rate
adjustments and the additional interest earned.
-15-
16
The permanent mortgage loans for operating facilities made through December
31, 1996 generally contain 10-year terms with up to 30-year amortization
schedules that provide for a balloon payment of the outstanding principal
balance at the end of the tenth year.
The Company generally requires a variety of additional forms of security
and collateral beyond that which is provided by the lien of the mortgage. For
example, the Company requires one or more of the following items: (a) a guaranty
of the complete payment and performance of all obligations associated with each
mortgage loan from the borrower's parent corporation, if any, other affiliates
of the borrower and/or one or more of the individual principals controlling such
borrower; (b) a collateral assignment from the borrower of the leases and the
rents relating to the mortgaged property; (c) a collateral assignment from the
borrower of all permits, licenses, approvals and contracts relating to the
operation of the mortgaged property; (d) a pledge of all, or substantially all,
of the equity interest held in the borrower; (e) letter of credit, cash
collateral or a pledge of a certificate of deposit, for a negotiated dollar
amount typically equal to three months to one year's principal and interest on
the loan (which letter of credit, cash collateral or pledge of certificate of
deposit typically remains in effect until the later to occur of (i) three years
after the closing of the mortgage loan or (ii) the achievement by the facility
of an agreed-upon cash flow debt coverage ratio for three consecutive fiscal
quarters; (f) an agreement by the guarantor or any affiliate of the guarantor,
borrower or operator of the facility to subordinate all payments due to it from
the borrower to all payments due to the Company under the mortgage loan; and (g)
a security interest in all of the borrower's personal property, including, in
most instances, the borrower's accounts receivable. In addition, the mortgage
loans are generally cross-defaulted and cross-collateralized with any other
mortgage loans, leases or other agreements between the borrower or any affiliate
of the borrower and the Company.
DEVELOPMENT INVESTMENTS AND LOANS
The Company makes development investments or loans which by their terms
are, or convert into, sale/leaseback transactions or permanent mortgage loans
upon the completion of the facilities. Generally, the interest or yield rates on
the outstanding balances of the Company's developments are up to 200 basis
points over the prime rate of a specified financial institution. The Company
also typically charges a commitment fee at the commencement of the project. The
development period generally commences upon the funding of such investments or
loans and terminates upon the earlier of the completion of development of the
applicable facility or a specific date. This period is generally 12 to 24
months. During the development term, funds are advanced pursuant to draw
requests in accordance with the terms and conditions of the applicable agreement
which, if significant, require a site visit prior to the advancement of funds.
Monthly payments based on an interest or yield rate only are made on the total
amount of the investment or loan proceeds advanced during the development
period.
The Company began its development program in August 1987 and since that
time has converted many of these developments into sale/leaseback transactions
or permanent mortgage loans representing an investment of $362,463,000 as of
December 31, 1996. In addition, at December 31, 1996 the Company had outstanding
development financing of $209,014,000 and was committed to providing additional
financing of approximately $135,346,000. As with the Company's sale/leaseback
transactions or permanent mortgage financing programs, the developments
generally include a variety of additional forms of security and collateral. See
"Leases" and "Permanent Mortgage Loans" for description. During the development
period, the Company generally requires additional security and collateral in the
form of either payment and performance completion bonds or completion guarantees
by either one, or a combination of, the lessee's or borrower's parent entity,
other affiliates, or one or more of the individual principals.
-16-
17
As a further safeguard during the development period, the Company generally
will retain a portion of the funding equal to 5% to 10% of the transaction
amount until it has received satisfactory evidence that the project has been
fully completed in accordance with the applicable plans and specifications and
the period during which liens may be perfected with respect to any work
performed, or labor or materials supplied, in connection with the construction
of the project has expired. The Company also monitors the progress of the
development of each project, the construction budget and the accuracy of draw
requests by having its own inspector perform on-site inspections of the project
prior to the release of any requested funds.
ITEM 3.
LEGAL PROCEEDINGS
In December 1993, the Chapter 11 Trustee of Towers Financial Corporation
commenced an action in the Suffolk County Superior Court for the Commonwealth of
Massachusetts against one of the Company's former lessees and in January 1994
two subsidiaries of the Company were named as additional defendants. The
plaintiff alleges that it holds a prior security interest in accounts receivable
of seven health care facilities, one of which is owned by the Company. The
plaintiff demands payment of all such receivables including those collected by
the Company, as well as interest and attorney's fees in an amount up to
$18,000,000. The Company is vigorously defending this action, denies any
liability to the plaintiff and has asserted that the plaintiff does not have a
valid prior security interest in any assets of the Company or its borrowers. The
trial on this matter has commenced and on September 4, 1996, the judge in this
matter issued a decision which was unfavorable to the Company in Phase I of the
trial, which trial had previously been segregated by agreement of the parties
into three distinct phases. The Company intends to continue to defend the matter
with regard to the remaining two phases and is considering an appeal of the
Phase I ruling. The Company is also a party to a number of other claims and
lawsuits arising out of the normal course of business; the Company believes that
none of these claims or pending lawsuits, either individually or in the
aggregate, will have a material adverse affect on the Company's business or on
its consolidated financial position.
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ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE.
ITEM 4A.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following information relative to the Company's executive officers is
given as of January 31, 1997:
Name Age Position with the Company
---- --- -------------------------
Abraham D. Gosman 68 Chairman, Chief Executive
Officer and Trustee
David F. Benson 47 President, Treasurer and Trustee
Michael F. Bushee 39 Chief Operating Officer
Michael S. Benjamin 39 Senior Vice President, Secretary
and Corporate Counsel
Laurie Tidor 39 Chief Financial Officer
Stephen C. Mecke 34 Vice President of Development
Debora A. Pfaff 33 Vice President of Operations
Stephen H. Press 60 Vice President of Acquisitions
John G. Demeritt 36 Controller
Abraham D. Gosman has been Chairman of Meditrust since he founded this
organization in 1985 and became Chief Executive Officer in February 1991. Mr.
Gosman is also Founder, Chairman of the Board, CEO and President of PhyMatrix
Corp., a physician practice management company which renders
managerial/administrative services to a variety of specialized medical care and
treatment providers and which completed its initial public offering in January
1996 (NASDAQ:PHMX). Additionally, Mr. Gosman is Founder and Chairman of the
Board of CareMatrix Corporation (AMEX:CMD) which provides a full range of
quality senior residential services in assisted living settings.
David F. Benson has been the President and a Trustee of Meditrust since
September 1991 and previously was Treasurer of the Company since its inception
in August 1985. Prior to that he was associated with Coopers & Lybrand and
specialized in providing services to a variety of health care clients. Mr.
Benson is also a Trustee of Mid-Atlantic Realty Trust, (AMEX:MRR), a shopping
center REIT, a Director of Harborside Healthcare Corporation, (NYSE:HRB), a
long-term care company, and a Director of Nursing Home Properties, Plc
(AIM:Nursing Home Properties Plc), a company specializing in the purchase and
leasing of purpose-built nursing homes located in the United Kingdom.
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19
Michael F. Bushee has been Chief Operating Officer of the Company since
September 1994. He was Senior Vice President of Operations of the Company from
November 1993 through August 1994, Vice President from December 1989 to October
1993, Director of Development from January 1988 to December 1989 and has been
associated with the Company since April 1987. He was previously associated with
The Stop & Shop Companies, Inc., a retailer of food products and general
merchandise, for three years and Wolf & Company, P.C., independent accountants,
for four years. He is also a Director of Sterling House Corporation, an
assisted-living provider, traded on the American Stock Exchange.
Michael S. Benjamin has been Senior Vice President, Secretary and General
Counsel of the Company since October 1993. He was Vice President, Secretary and
General Counsel from May 1992 to October 1993, Secretary and General Counsel
from December 1990 to May 1992 and Assistant Counsel to the Company from
November 1989 to December 1990. His previous association was with the law firm
of Brown, Rudnick, Freed & Gesmer, from 1983 to 1989.
Laurie Tidor has been Chief Financial Officer since December 1996. Prior to
that, she was associated with Coopers & Lybrand, L.L.P. in various capacities,
including Partner, from 1982 to 1996. During her career at the firm, clients
serviced included publicly traded real estate investment trusts, public
utility companies and investment companies.
Stephen C. Mecke has been Vice President of Development since October 1995
and has been the Company's Director of Development since June 1992. He was
previously the manager of underwriting at Continental Realty Credit Inc., a
commercial mortgage company, from October 1988 to June 1992.
Debora A. Pfaff has been Vice President of Operations since October 1995
and has been the Company's Director of Operations since September 1992. She was
previously a Senior Manager with KPMG Peat Marwick where she worked from 1985 to
1992.
Stephen H. Press has been Vice President of Acquisitions of the Company
since October 1993 and previously held this position with the Company from June
1987 to December 1990. He was Vice President of Development and Regulatory
Affairs for Integrated Health Services, Inc., a medical services company, from
April 1991 to October 1993.
John G. Demeritt has been Controller of the Company since October 1995.
Prior to that, he was Corporate Controller of CMG Information Services, Inc., an
information service provider, from 1994 to 1995. He was Vice President of
Finance and Treasurer of Salem Sportswear Corporation, a manufacturer and
marketer of licensed sports apparel, from June 1991 to November 1993. He was
Controller of Scitex America Corporation, a manufacturer and distributor of
electronic prepress equipment, from August 1986 to June 1991, and was previously
associated with Laventhol & Horwath, independent accountants, from 1983 to 1986.
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PART II
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
(a) and (b) The Company's Shares are traded on the New York Stock Exchange
under the symbol MT. The following table sets forth for the periods shown the
high and low sales prices for the Shares (as reported on the New York Stock
Exchange Composite Tape):
1996 1995
- - -------------------------------------- ------------------------------------
Quarter High Low Quarter High Low
------- ---- --- ------- ---- ---
First $36.63 $33.25 First $32.13 $29.50
Second $34.38 $31.75 Second $34.13 $29.00
Third $35.38 $33.13 Third $35.50 $32.63
Fourth $40.00 $34.50 Fourth $35.50 $31.25
There were approximately 5,541 holders of record of the Company's Shares as
of January 31, 1997. Included in the number of Shareholders of record are
Shares held in "nominee" or "street" name.
(c) The Company has declared the following distributions during its two
most recent fiscal years:
Distributions
Period Declared Per Share
------ ------------------
Quarter Ended March 31, 1995.................................. $ .6675
Quarter Ended June 30, 1995 .................................. .6725
Quarter Ended September 30, 1995.............................. .6775
Quarter Ended December 31, 1995............................... .6825
-------
$2.70
=====
Quarter Ended March 31, 1996.................................. $ .6875
Quarter Ended June 30, 1996................................... .6925
Quarter Ended September 30, 1996.............................. .6975
Quarter Ended December 31, 1996............................... .7025
-------
$2.78
=====
The Company intends to distribute to its shareholders on a quarterly basis
a majority of cash flow from operating activities available for distribution.
Cash flow from operating activities available for distribution to shareholders
of the Company will be derived primarily from the rental payments and interest
payments derived from its real estate investments. All distributions will be
made by the Company at the discretion of the Trustees and will depend on the
earnings of the Company, its financial condition and such other factors as the
Trustees deem relevant. In order to qualify for the beneficial tax treatment
accorded to real estate investment trusts by Sections 856 to 860 of the Internal
Revenue Code, the Company is required to make distributions to holders of its
Shares of at least 95% of its "real estate investment trust taxable income".
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21
ITEM 6.
SELECTED FINANCIAL INFORMATION
Year Ended December 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(In thousands, except per Share data)
OPERATING DATA:
Revenues ............................... $254,024 $209,369 $172,993 $150,375 $132,394
-------- -------- -------- -------- --------
Expenses:
Interest expense .................... 64,216 64,163 67,479 62,193 58,159
Depreciation and amortization ....... 23,207 18,176 17,171 16,277 14,032
General and administrative expenses . 8,625 7,058 7,883 8,269 8,845
-------- -------- -------- -------- --------
Total expenses .................... 96,048 89,397 92,533 86,739 81,036
-------- -------- -------- -------- --------
Net income before extraordinary item ... 157,976 119,972 80,460 63,636 51,358
Loss on prepayment of debt ............. 33,454
-------- -------- -------- -------- --------
Net income ............................. $157,976 $ 86,518 $ 80,460 $ 63,636 $ 51,358
======== ======== ======== ======== ========
Shares of beneficial interest
(weighted average) .................. 59,458 47,563 35,314 31,310 26,360
PER SHARE DATA:
Net income before extraordinary item ... $ 2.66 $ 2.52 $ 2.28 $ 2.03 $ 1.95
Loss on prepayment of debt ............. .70
-------- -------- -------- -------- --------
Net income ............................. $ 2.66 $ 1.82 $ 2.28 $ 2.03 $ 1.95
======== ======== ======== ======== ========
Distributions paid ..................... $ 2.78 $ 2.70 $ 2.62 $ 2.54 $ 2.46
======== ======== ======== ======== ========
December 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(In thousands)
BALANCE SHEET DATA:
Real estate investments, net ........... $2,188,078 $1,777,798 $1,484,229 $1,214,308 $1,021,630
Total assets ........................... 2,316,875 1,891,852 1,595,130 1,310,401 1,094,941
Indebtedness ........................... 858,760 762,291 765,752 658,245 606,585
Total liabilities ...................... 931,934 830,097 824,983 724,606 663,458
Total shareholders' equity ............. 1,384,941 1,061,755 770,147 585,795 431,483
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information required by this item is incorporated by reference to the
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Current Report on Form 8-K dated January 31,
1997.
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22
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The "Consolidated Financial Statements", "Notes to Consolidated Financial
Statements" and "Report of Independent Accountants" required by this item are
incorporated herein by reference in the Current Report on Form 8-K dated January
31, 1997.
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23
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Shareholders and Trustees of Meditrust:
Our report on the consolidated financial statements of Meditrust has been
incorporated by reference in this Form 10-K from Meditrust's Current Report on
Form 8-K dated January 31, 1997. In connection with our audits of such financial
statements, we have also audited the related financial statement schedules
listed on page 37 in the index of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
Boston, Massachusetts Coopers & Lybrand L.L.P.
January 16, 1997
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MEDITRUST
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Additions
Balance at Charged to Additions Balance at
Beginning of Costs and Charged to Other End of
Description Period Expenses Accounts Deductions Period
----------- ------ -------- -------- ---------- ------
General valuation
allowance included
in Accrued Expenses
and Other Liabilities
for the year ended
December 31:
1994 $12,035,670 $3,783,176 $11,272,009 (A) $4,546,837
1995 4,546,837 $5,167,735 9,714,572
1996 9,714,572 1,715,000 (B) 7,999,572
<FN>
(A) Includes $9,100,000 reclassified as a reduction to Other Assets and
$2,172,009 relating to the valuation of a real estate investment.
(B) Relates to receivables charged off.
Additions
Balance at Charged to Additions Balance at
Beginning of Costs and Charged to Other End of
Description Period Expenses Accounts Deductions Period
----------- ------ -------- -------- ---------- ------
General valuation
allowance included
in Other Assets
for the year ended
December 31:
1994 $ 9,100,000 (A) $9,100,000
1995 $9,100,000 13,325,221 $18,192,698 (B) 4,232,523
1996 4,232,523 3,050,328 (C) 1,182,195
<FN>
(A) Reclassified from valuation allowance included in Accrued Expenses and
Other Liabilities.
(B) Includes approximately $89,000 relating to the valuation of other assets
and $18,104,000 relating to receivables charged off.
(C) Relates to receivables charged off.
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25
MEDITRUST
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Initial Cost
to Company Gross Amount at Which Carried at Close of Period
---------- Cost ------------------------------------------------
Capitalized
Building & Subsequent to Building & Accum. Const. Date
Description(1) Encumbrances Improvements Acquisitions Land(2) Improvements Total(5) Deprec.(4)(5) Date Acquired
- - -------------- ------------ ------------ ------------- ------- ------------ -------- ------------- ---- --------
LONG-TERM CARE
- - --------------
Alabaster, AL....... $ 5,799,000 $1,810,000 $ 150,000 $ 7,609,000 $ 7,759,000 $1,589,875 1971 8/87
Cheshire, CT........ 6,770,000 455,000 6,770,000 7,225,000 1,896,996 1975 10/85
Danbury, CT......... 5,295,000 305,000 5,295,000 5,600,000 1,483,677 1976 10/85
Darien, CT.......... 4,202,477 45,000 4,202,477 4,247,477 280,160 1975 6/94
Milford, CT......... 5,538,590 5,538,590 5,538,590 334,631 1971 6/94
Milford, CT......... 10,000,000 10,000,000 10,000,000 645,823 1992 6/94
Newington, CT....... 8,970,000 430,000 8,970,000 9,400,000 2,513,441 1978 10/85
Southbury, CT....... 3,224,151 1,020,000 3,224,151 4,244,151 208,227 1975 6/94
Southfield, CT...... 7,750,000 750,000 7,750,000 8,500,000 613,546 1993 11/93
Westport, CT........ 4,970,000 400,000 4,970,000 5,370,000 1,392,618 1965 10/85
Wethersfield, CT.... 12,440,000 6,643,218 19,083,218 19,083,218 3,549,395 1965 8/86
Bradenton, FL....... $3,420,000 9,900,000 4,100,000 9,900,000 14,000,000 2,227,500 1985 12/87
Naples, FL.......... 6,123,616 26,775 6,123,616 6,150,391 153,096 1969 1/96
Palm Beach, FL...... 46,399,797 46,399,797 46,399,797 1996 4/96
Sarasota, FL........ 4,447,012 1,060,800 4,447,012 5,507,812 111,180 1982 1/96
Venice, FL.......... 8,592,203 128,500 8,592,203 8,720,703 214,800 1985 1/96
Indianapolis, IN.... 2,455,612 114,700 2,455,612 2,570,312 61,392 1973 1/96
New Haven, IN....... 4,553,541 128,100 4,553,541 4,681,641 113,844 1982 1/96
W. Lafayette, IN.... 4,190,275 6,030,000 190,000 50,000 6,220,000 6,270,000 1,379,286 1964 1/88
Beverly, MA......... 6,300,000 645,000 6,300,000 6,945,000 1,765,315 1972 10/85
Concord, MA......... 8,762,000 3,538,000 8,762,000 12,300,000 273,811 1995 11/95
New Bedford, MA..... 7,492,000 1,008,000 7,492,000 8,500,000 234,120 1995 11/95
Newton, MA.......... 12,430,000 630,000 12,430,000 13,060,000 3,483,007 1977 10/85
Lexington, MA....... 11,210,000 590,000 11,210,000 11,800,000 2,899,109 1965 8/86
E. Longmeadow, MA... 12,400,000 3,595,928 400,000 15,995,928 16,395,928 3,047,268 1986 9/87
Holyoke, MA......... 11,980,670 684,248 121,600 12,664,918 12,786,518 1,352,953 1973 9/92
Lowell, MA.......... 9,897,730 594,621 500,000 10,492,351 10,992,351 1,120,264 1975 9/92
Lynn, MA............ 13,293,267 870,248 1,206,734 14,163,515 15,370,249 1,330,923 1960 4/93
Northampton, MA..... 2,709,612 187,500 2,709,612 2,897,112 174,995 1974 6/94
Peabody, MA......... 7,245,315 805,035 7,245,315 8,050,350 1,936,425 1987 10/90
Randolph, MA........ 9,014,760 1,001,640 9,014,760 10,016,400 1,408,575 1987 10/90
Weymouth, MA........ 10,719,932 850,000 10,719,932 11,569,932 692,323 1994 6/94
Wilmington, MA...... 6,689,925 743,325 6,689,925 7,433,250 1,818,726 1987 10/90
Montgomery, MD...... 16,888,000 1,300,000 16,888,000 18,188,000 527,747 1994 11/95
-25-
26
MEDITRUST
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Initial Cost
to Company Gross Amount at Which Carried at Close of Period
---------- Cost ------------------------------------------------
Capitalized
Building & Subsequent to Building & Accum. Const. Date
Description(1) Encumbrances Improvements Acquisitions Land(2) Improvements Total(5) Deprec.(4)(5) Date Acquired
- - -------------- ------------ ------------ ------------- ------- ------------ -------- ------------- ---- --------
LONG-TERM CARE,
CONTINUED
Grand Blanc, MI..... $ 6,500,000 $863,800 $ 120,000 $ 7,363,800 $ 7,483,800 $1,531,028 1970 5/88
Riverside, MO....... 8,559,900 238,000 8,559,900 8,797,900 1,872,466 1965 3/88
Bedford, NH......... $7,367,943 12,691,500 808,500 12,691,500 13,500,000 322,211 1992 1/96
Keene, NH........... 3,688,917 87,000 3,688,917 3,775,917 92,200 1965 1/96
Petersborough, NH... 4,779,992 128,700 4,779,992 4,908,692 119,496 1976 1/96
Milford, NH......... 3,195,288 52,000 3,195,288 3,247,288 79,884 1900 1/96
Milford, NH......... 4,222,545 82,000 4,222,545 4,304,545 105,564 1972 1/96
Winchester, NH...... 3,363,325 35,000 3,363,325 3,398,325 84,084 1987 1/96
Bridgewater, NJ..... 12,208,944 1,193,400 12,208,944 13,402,344 305,220 1971 1/96
Bound Brook, NJ..... 1,624,000 1,176,000 1,624,000 2,800,000 405,963 1963 12/86
Oradell, NJ......... 14,986,000 1,714,000 14,986,000 16,700,000 468,315 1995 11/95
Camden, NJ.......... 8,334,780 450,250 8,334,780 8,785,030 2,083,675 1984 12/86
Marlton, NJ......... 14,060,000 240,000 14,060,000 14,300,000 439,380 1995 11/95
New Milford, NJ..... 11,110,000 1,090,000 11,110,000 12,200,000 2,499,767 1971 12/87
Niskayuna, NY....... 9,708,000 834,537 292,000 10,542,537 10,834,537 1,000,833 1976 3/93
Rennsselaer, NY..... 1,400,000 1,400,000 1,400,000 75,842 1975 11/94
Troy, NY............ 9,967,564 491,673 56,100 10,459,237 10,515,337 889,295 1972 8/93
Bellbrook, OH....... 2,787,134 212,000 2,787,134 2,999,134 423,888 1981 12/90
Huber Heights, OH... 3,593,360 174,000 3,593,360 3,767,360 546,486 1984 12/90
Swanton, OH......... 5,500,000 350,000 5,500,000 5,850,000 240,625 1950 4/95
Troy, OH............ 5,756,197 210,600 5,756,197 5,966,797 143,904 1970 1/96
Medina, OH.......... 6,700,705 10,568,000 232,000 10,568,000 10,800,000 2,289,767 1954 4/88
New London, OH...... 2,110,837 22,600 2,110,837 2,133,437 321,033 1985 12/90
West Carrolton, OH.. 3,483,669 216,400 3,483,669 3,700,069 529,816 1983 12/90
Erie, PA............ 4,753,000 375,000 335,000 5,128,000 5,463,000 1,140,648 1977 12/87
Greensburg, PA...... 5,544,012 525,000 5,544,012 6,069,012 704,551 1991 6/90
(4) Facilities, WV.. 16,299,400 900,600 16,299,400 17,200,000 443,317 1987 12/95
ASSISTED LIVING
Blytheville, AR..... 554,743 554,743 554,743 1996 4/96
Maumelle, AR........ 766,539 766,539 766,539 1996 11/96
Mt. Home, AR........ 626,033 626,033 626,033 1996 11/96
Pocahontas, AR...... 469,012 469,012 469,012 1996 11/96
Sherwood, AR........ 923,619 923,619 923,619 1996 11/96
-26-
27
MEDITRUST
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Initial Cost
to Company Gross Amount at Which Carried at Close of Period
---------- Cost ------------------------------------------------
Capitalized
Building & Subsequent to Building & Accum. Const. Date
Description(1) Encumbrances Improvements Acquisitions Land(2) Improvements Total(5) Deprec.(4)(5) Date Acquired
- - -------------- ------------ ------------ ------------ ------- ------------ -------- ------------- ---- --------
ASSISTED LIVING,
CONTINUED
Grand Terrace, CA... $ 3,702,263 $ 450,000 $ 3,702,263 $ 4,152,263 $ 38,565 1989 8/96
Bradenton, FL....... 4,046,153 470,000 4,046,153 4,516,153 95,559 1978 3/96
Brandon, FL......... 5,404,280 290,000 5,404,280 5,694,280 112,590 1991 3/96
Ft. Myers, FL....... 3,012,558 620,000 3,012,558 3,632,558 62,760 1996 3/96
Ft. Myers, FL....... 3,252,481 513,000 3,252,481 3,765,481 6,776 1982 12/96
Jupiter, FL......... 400,347 400,347 400,347 1996 6/96
Lakeland, FL........ 6,076,053 600,000 6,076,053 6,676,053 126,580 1991 3/96
Lecanto, FL......... 4,019,365 150,000 4,019,365 4,169,365 66,992 1986 5/96
Melbourne, FL....... 2,565,000 2,565,000 2,565,000 6/96
Orlando, FL......... 6,201,839 3,125,000 6,201,839 9,326,839 129,210 1996 3/96
Pinellas, FL........ 8,785,192 620,000 8,785,192 9,405,192 91,515 1986 8/96
Sarasota, FL........ 5,939,699 540,000 5,939,699 6,479,699 123,740 1982 3/96
Sarasota, FL........ 7,841,931 7,841,931 7,841,931 1989
Stuart, FL.......... 2,517,500 2,517,500 2,517,500 1996 6/96
Sunrise, FL......... 13,747,273 470,000 13,747,273 14,217,273 229,120 1991 5/96
Tampa, FL........... 3,366,481 399,000 3,366,481 3,765,481 7,014 1996 12/96
Vera Beach, FL...... 2,593,500 2,593,500 2,593,500 1996 6/96
Chubbock, ID........ 4,472,363 90,000 4,472,363 4,562,363 46,586 1996 8/96
Coeur d'Alene, ID... 4,921,376 4,921,376 4,921,376 1996 6/96
Pocatello, ID....... 3,200,000 160,000 3,200,000 3,360,000 20,001 1996 10/96
Hutchinson, KS...... 6,943,183 6,943,183 6,943,183 1989 3/96
Wichita, KS......... 6,762,000 748,000 6,762,000 7,510,000 140,879 1993 3/96
Tewksbury, MA....... 4,943,256 480,000 4,943,256 5,423,256 102,990 1987 3/96
Ann Arbor, MI....... 2,797,488 280,800 2,797,488 3,078,288 5,828 1995 12/96
Farmington I, MI.... 3,205,250 215,600 3,205,250 3,420,850 6,678 1994 12/96
Farmington II, MI... 3,504,592 246,400 3,504,592 3,750,992 7,301 1995 12/96
Utica, MI........... 3,077,414 277,200 3,077,414 3,354,614 6,411 1995 12/96
Ridgeland, MS....... 2,632,661 2,632,661 2,632,661 1996 6/96
Altoona, PA......... 642,634 642,634 642,634 1996 12/96
Lower Makesfield, PA 4,494,920 504,000 4,494,920 4,998,920 9,364 1996 12/96
Montgomery, PA...... 4,487,033 480,000 4,487,033 4,967,033 9,348 1996 12/96
Northhampton, PA.... 9,624,115 1,212,000 9,624,115 10,836,115 20,050 1990 12/96
State College, PA... 1,397,618 1,397,618 1,397,618 1996 8/96
Anderson Place, SC.. 10,499,705 170,000 10,499,705 10,669,705 65,622 1987 10/96
Greenville, SC...... 2,378,802 2,378,802 2,378,802 1996 6/96
-27-
28
MEDITRUST
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Initial Cost
to Company Gross Amount at Which Carried at Close of Period
---------- Cost ------------------------------------------------
Capitalized
Building & Subsequent to Building & Accum. Const. Date
Description(1) Encumbrances Improvements Acquisitions Land(2) Improvements Total(5) Deprec.(4)(5) Date Acquired
- - -------------- ------------ ------------- ------------ ------- ------------ -------- ------------- ---- --------
ASSISTED LIVING,
CONTINUED
Clarksville, TN..... $ 1,929,036 $ 1,929,036 $ 1,929,036 1996 7/96
Amarillo, TX........ 2,577,771 2,577,771 2,577,771 1996 7/96
Texas, ALC.......... 11,155,104 $ 625,000 11,155,104 11,780,104 185,920 1996 5/96
Beaumont, TX........ 4,866,433 4,866,433 4,866,433 1996 5/96
Lubbock, TX......... 4,388,436 4,388,436 4,388,436 1996 4/96
Midland, TX......... 4,531,340 4,531,340 4,531,340 1996 4/96
Nacodoches, TX...... 4,968,892 230,000 4,968,892 5,198,892 41,408 1996 9/96
San Angelo, TX...... 2,894,651 2,894,651 2,894,651 1996 8/96
Wichita Falls, TX... 3,018,241 3,018,241 3,018,241 1996 8/96
Billingham, WA...... 3,327,423 350,000 3,327,423 3,677,423 20,796 1996 10/96
Federal Way, WA..... 5,185,000 590,000 5,185,000 5,775,000 97,218 1996 4/96
Ocean Shores, WA.... 2,627,050 2,627,050 2,627,050 1996 8/96
Brown Deer, WI...... 635,266 72,000 635,266 707,266 1,324 1995 12/96
Analaska, WI........ 1,205,931 84,000 1,205,931 1,289,931 2,512 1995 12/96
Sussex, WI.......... 874,824 86,000 874,824 960,824 1,823 1995 12/96
REHABILITATION
- - --------------
Benton, AR.......... 7,865,000 392,410 135,000 8,257,410 8,392,410 767,595 1967 4/93
Jonesboro, AR....... $4,116,215 8,861,835 196,225 8,861,835 9,058,060 1,763,816 1989 2/89
Tucson, AZ.......... 9,965,000 9,965,000 9,965,000 1,598,542 1990 8/90
Bakersfield, CA..... 10,907,463 1,522,537 10,907,463 12,430,000 1,795,194 1990 6/90
Fresno, CA.......... 7,750,611 14,469,580 2,088,920 14,469,580 16,558,500 2,110,169 1991 3/91
Kentfield, CA....... 9,650,000 350,000 9,650,000 10,000,000 2,110,932 1963 3/88
Topeka, KS.......... 5,053,721 10,353,741 1,295,499 10,353,741 11,649,240 2,033,646 1989 2/89
Bowling Green, KY... 10,000,000 10,000,000 10,000,000 645,825 1992 6/94
Ruston, LA.......... 4,073,344 10,021,549 321,551 10,021,549 10,343,100 2,038,984 1988 12/88
Baton Rouge, LA..... 5,411,752 10,366,008 1,211,000 10,366,008 11,577,008 2,008,418 1988 4/89
New Bedford, MA..... 10,000,000 859,303 10,859,303 10,859,303 676,261 1920 6/94
Battle Creek, MI.... 7,265,913 408,529 146,970 7,674,442 7,821,412 715,222 1933 4/93
Effingham, NH....... 8,121,200 3,971,031 1,478,800 12,092,231 13,571,031 1,073,644 1985 4/93
Cortland, NY........ 26,309,407 1,503,410 263,000 27,812,817 28,075,817 2,354,608 1971 8/93
Arlington, TX....... 10,132,662 1,161,338 10,132,662 11,294,000 1,667,690 1990 6/90
Ft. Worth, TX....... 5,771,733 10,814,520 1,548,022 10,814,520 12,362,542 1,734,810 1990 8/90
Houston, TX......... 5,249,663 10,707,069 525,000 10,707,069 11,232,069 2,074,485 1989 4/89
Lake Terrace, WA.... 4,389,224 441,796 1,029,980 4,831,020 5,861,000 315,678 1987 5/93
Waterford, WI....... 11,515,023 2,093,205 280,000 13,608,228 13,888,228 1,246,272 1968 4/93
-28-
29
MEDITRUST
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
Initial Cost
to Company Gross Amount at Which Carried at Close of Period
---------- Cost ------------------------------------------------
Capitalized Date
Building & Subsequent to Building & Accum. Const. Ac-
Description(1) Encumbrances Improvements Acquisitions Land(2) Improvements Total(5) Deprec.(4)(5) Date quired
- - -------------- ------------ ------------ ------------- ------- ------------ -------- ------------- ---- -------
ACUTE CARE HOSPITAL
- - -------------------
Phoenix, AZ......... $ 63,960,000 $ 1,690,000 $ 63,960,000 65,650,000 $ 3,064,750 1954 2/95
ALCOHOL AND SUBSTANCE
ABUSE TREATMENT
CENTERS AND
PSYCHIATRIC
FACILITIES
----------
Hollywood, CA....... 4,035,000 1,715,000 4,035,000 5,750,000 874,225 1957 5/88
Monroe, LA.......... 7,770,000 $ 450,000 530,000 8,220,000 8,750,000 1,768,650 1982 5/88
DeSoto, TX.......... 3,934,000 1,775,730 849,270 5,709,730 6,559,000 1,234,098 1988 1/88
College Station, TX. 3,650,771 58,122 980,185 3,708,893 4,689.078 531,865 1987 5/93
----------- -------------- ----------- ----------- -------------- -------------- ----------- ---------
TOTAL............... $59,105,962 $1,007,337,208 $28,906,809 $68,098,156 $1,036,244,017 $1,104,342,173(3) $98,082,165
=========== ============== =========== =========== ============== ============== ===========
-29-
30
MEDITRUST
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED
DECEMBER 31, 1996
(1) Facility classifications are Long-Term Care (LTC), Retirement Living (RL),
Psychiatric Hospital (Psych), Rehabilitation Hospital (Rehab) and Assisted
Living (AL).
(2) Gross amount at which land is carried at close of period also represents
initial cost to the Company.
(3) Cost for federal income tax purposes.
(4) Depreciation is calculated using a 40-year life for all completed
facilities.
(5) Real estate and accumulated depreciation reconciliations for the three
years ended December 31, 1996 are as follows:
Accumulated
Real Estate Depreciation
----------- ------------
(In thousands)
Balance at close of year--December 31, 1993................... $ 685,896 $ 73,294
Additions during the period:
Acquisitions........................................... 18,327
Value of real estate acquired.......................... 30,000
Additions to existing properties....................... 10,785
Other.................................................. 11,570
Provision for depreciation............................. 15,209
Deductions:
Lease terminations..................................... (124,000) (22,463)
Sale of real estate.................................... (4,000)
Other.................................................. (2,172) (122)
----------- --------
Balance at close of year-- December 31, 1994.................. 626,406 65,918
Additions during the period:
Acquisitions.......................................... 91,700
Value of real estate acquired......................... 69,988
Additions to existing properties...................... 2,487
Provision for depreciation............................ 16,283
Deductions:
Lease terminations..................................... (35,602) (3,486)
Sale of real estate.................................... (8,600) (1,512)
---------- --------
Balance at close of year--December 31, 1995................... 746,379 77,203
Additions during the period:
Acquisitions.......................................... 325,789
Value of real estate acquired......................... 36,875
Additions to existing properties......................
Provision for depreciation............................ 21,269
Deductions:
Sale of real estate................................... (4,701) (390)
---------- --------
Balance at close of year -- December 31, 1996................. $1,104,342 $ 98,082
========== ========
-30-
31
MEDITRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996
Periodic Face Carrying
Interest Final Maturity Payment Amount of Amount of
Description (A) Rate Date Terms Mortgages Mortgages (B)
--------------- ---- ---- ----- --------- -------------
Individual mortgages in excess of 3%
of the total carrying amount:
26 long-term care facilities 10.50% February 1, 2004 Monthly payments of $48,800,000 $47,999,000
located in Illinois principal and interest
of $446,000, balloon
payment of $44,588,000
due at maturity
6 long-term care facilities 10.50% June 8, 2004 Interest only through 42,000,000 42,000,000
located in Massachusetts July 1998, monthly
principal and interest
of $397,000 thereafter,
balloon payment of
$39,210,000 due at
maturity
23 long-term care facilities 10.40% November 1, 2004 Monthly payments of 46,000,000 45,481,000
located in Texas principal and interest
of $417,000, balloon
payment of $42,085,000
due at maturity
-31-
32
MEDITRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996
Periodic Face Carrying
Interest Final Maturity Payment Amount of Amount of
Description (A) Rate Date Terms Mortgages Mortgages (B)
--------------- ---- ---- ----- --------- -------------
18 long-term care facilities 10.85% August 23, 2005 Monthly payments of 86,700,000 85,951,000
located in Colorado, Florida, principal and interest of
Indiana, Kansas, Missouri, $800,000, balloon
Nebraska, North Carolina, payment of
Tennessee and Washington $78,276,000 due at
maturity
17 long-term care facilities 10.75% May 21, 2003 Monthly payments of 103,618,000 102,044,000
located in Arizona, California, principal and interest
Colorado, Florida, Georgia, of $968,000, balloon
Indiana, Kansas, Tennessee and payment of $95,501,000
Utah due at maturity
10 long-term care facilities 10.95% November 17, 2001 Monthly payments of 37,100,000 36,754,000
located in Missouri, Nebraska principal and interest
and Texas of $352,000, balloon
payment of $35,461,000
due at maturity
7 long-term care facilities, 10.70% August 31, 2006 Interest only through 41,385,000 41,385,000
located in Missouri October 1997, monthly
principal and interest
of $385,000 thereafter,
balloon payment of
$38,625,000 due at
maturity
-32-
33
MEDITRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996
Periodic Face Carrying
Interest Final Maturity Payment Amount of Amount of
Description (A) Rate Date Terms Mortgages Mortgages (B)
--------------- ---- ---- ----- --------- -------------
Mortgages individually less than
3% of total carrying amount:
Long-term care facilities, 51 From 8.83% From December 1996 (C) 470,887,000
mortgages, face amounts ranging to 12.30% to November 2006
from $900,000 to $32,216,000,
located in Arizona, California,
Colorado, Connecticut, Florida,
Idaho, Indiana, Kentucky,
Massachusetts, Michigan, Missouri,
New Jersey, New Mexico, Nevada,
New York, Pennsylvania, Rhode
Island, Tennessee, Texas, Utah,
Washington, West Virginia and
Wyoming
Rehabilitation hospitals, 3 From 10.50% From September 2000 47,646,000
mortgages, face amounts ranging to 12.50% to July 2004
from $9,000,000 to $30,975,000,
located in California, Colorado
and Tennessee
Retirement living facilities, From 8.83% From December 1998 41,673,000
4 mortgages, face amounts ranging to 11.00% to January 2006
from $5,500,000 to $15,820,000,
located in Colorado, Florida,
North Carolina and Utah
Alcohol and substance abuse 11.00% September 29, 2005 32,986,000
treatment facility, face amount
of $33,300,000, located
in New York
-33-
34
MEDITRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996
Periodic Face Carrying
Interest Final Maturity Payment Amount of Amount of
Description (A) Rate Date Terms Mortgages Mortgages (B)
--------------- ---- ---- ----- --------- -------------
Medical office buildings, From 8.72% From February 2004 67,284,000
10 mortgages, face amounts to 9.55% to January 2008
ranging from $2,400,000 to
$10,655,000, located in
California, Florida,
Tennessee and Texas
Assisted living facilities, From 9.85% From September 2005 14,445,000
3 mortgages, face amounts ranging to 10.61% to September 2006
from $4,725,000 to $5,046,000,
located in Michigan, Missouri,
Ohio and Wisconsin
Construction Loans:
- - -------------------
Long-term care facilities, 7 loans, From 9.75% (E) 50,029,000
amounts ranging from $6,939,000 to 10.75%
to $25,570,000, located in Florida,
Idaho, Massachusetts, New
Jersey, Nevada and Pennsylvania
Medical office buildings, 6 loans, 10.25% (E) 27,743,000
amounts ranging from $3,550,000 to
$11,975,000, located in Arizona,
Florida and Texas
Assisted living facilities, 5 loans, From 8.83% (E) 27,511,000
amounts ranging from $4,691,000 to to 10.25% ------------ --------------
$21,400,000, located in Florida,
Indiana and Michigan
$405,603,000 $1,181,818,000 (D)
============ ==============
-34-
35
MEDITRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
(A) Virtually all mortgage loans on real estate are first mortgage loans.
(B) No mortgage loan is subject to delinquent principal or interest, except for
one property located in New Jersey.
(C) Mortgage loan term has been extended for a one-year period.
(D) The aggregate cost for federal income tax purposes.
(E) Final maturity date will be determined upon completion of construction.
Reconciliation of carrying amount of mortgage loans for the three years
ended December 31, 1996 is as follows:
(In thousands)
Balance at December 31, 1993 .......................... $ 601,706
Additions during period:
New mortgage loans ............................ 241,339
Construction loan advances .................... 49,688
Non-cash additions ............................ 71,594
Deductions during period:
Collection of principal ....................... (5,149)
Conversion of construction loans to
sale/leaseback transactions ................ (10,239)
Prepayment of mortgage loans .................. (14,835)
Other ......................................... (10,363)
----------
Balance at December 31, 1994 .......................... 923,741
Additions during period:
New mortgage loans ............................ 152,216
Construction loan advances .................... 106,946
Other ......................................... 9,953
Deductions during period:
Collection of principal ....................... (6,615)
Non-cash deductions ........................... (34,386)
Prepayment of mortgage loans .................. (43,232)
----------
Balance at December 31, 1995 .......................... 1,108,623
Additions during period:
New mortgage loans ............................ 137,686
Construction loan advances .................... 117,495
Other ......................................... 9,903
Deductions during period:
Collection of principal ....................... (33,962)
Non-cash deductions ........................... (29,642)
Prepayment of mortgage loans .................. (128,285)
----------
Balance at December 31, 1996 .......................... $1,181,818
==========
-35-
36
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
NOT APPLICABLE.
PART III
ITEM 10.
TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference to Item 4a above and the table and the
information following it appearing in the first subsection of the section
entitled "Election of Trustees" contained in the Company's Proxy Statement for
its Annual Meeting of Shareholders ("Annual Meeting Proxy Statement"), to be
filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended ("Regulation 14A"). There are no family relationships among any of the
Trustees or executive officers of the Company.
Incorporated by reference to the section entitled "Section 16(a) Beneficial
Ownership Reporting Compliance" contained in the Company's Annual Meeting Proxy
Statement, to be filed pursuant to Regulation 14A.
ITEM 11.
EXECUTIVE COMPENSATION
Incorporated by reference to the section entitled "Executive Compensation"
contained in the Company's Annual Meeting Proxy Statement, to be filed pursuant
to Regulation 14A.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference to the table appearing in the first subsection of
the section entitled "Election of Trustees" and the section entitled "Voting
Securities, Principal Holders Thereof and Holdings by Certain Executive
Officers" contained in the Company's Annual Meeting Proxy Statement, to be filed
pursuant to Regulation 14A.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference to the section entitled "Certain Transactions"
contained in the Company's Annual Meeting Proxy Statement, to be filed pursuant
to Regulation 14A.
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PART IV
ITEM 14.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
No financial statements have been filed as a part of this report other
than those incorporated by reference in Item 8.
2. Financial Statement Schedules Page(s)
-------
Report of Independent Accountants on Financial Statement Schedules..... 23
II. Valuation and Qualifying Accounts...................... 24
III. Real Estate and Accumulated Depreciation............... 25-30
IV. Mortgage Loans on Real Estate.......................... 31-35
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions, are inapplicable or have been disclosed in the
notes to consolidated financial statements, and therefore, have been omitted.
3. Exhibits
Exhibits required as part of this report are listed in the index
appearing on Pages 40 through 44.
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
1988 Stock Option Plan - Form 10-K for fiscal year ended
December 31, 1988, Exhibit 10.13
Amended and Restated 1992 - Form 10-Q for fiscal quarter ended
Equity Incentive Plan September 30, 1996, Exhibit 4
Trustee Retirement Plan - Form 10-K for fiscal year ended
December 31, 1995, Exhibit 4.3
Employment Agreement with - Form 10-Q for fiscal quarter ended
Abraham D. Gosman March 31, 1993, Exhibit 10.1
(b) The Company did not file any reports on Form 8-K during the quarter
ended December 31, 1996.
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38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
MEDITRUST
By:/s/ Laurie Tidor
------------------------------------------------
Chief Financial Officer
(and Principal Financial and Accounting Officer)
Dated: March 12, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Title Date
---- ----- ----
/s/ Abraham D. Gosman Chairman, Chief Executive March 12, 1997
- - ------------------------ Officer and Trustee
Abraham D. Gosman
/s/ David F. Benson President, Treasurer and March 12, 1997
- - ------------------------ Trustee
David F. Benson
/s/ Edward W. Brooke Trustee March 12, 1997
- - ------------------------
Edward W. Brooke
/s/ Philip L. Lowe Trustee March 12, 1997
- - ------------------------
Philip L. Lowe
/s/ Thomas J. Magovern Trustee March 12, 1997
- - ------------------------
Thomas J. Magovern
/s/ Gerald Tsai, Jr Trustee March 12, 1997
- - ------------------------
Gerald Tsai, Jr.
/s/ Frederick W. Zuckerman Trustee March 12, 1997
- - ------------------------
Frederick W. Zuckerman
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39
The Declaration of Trust establishing Meditrust dated August 6, 1985 (the
"Declaration"), a copy of which is duly filed in the office of the Secretary of
State of the Commonwealth of Massachusetts, provides that the name "Meditrust"
refers to the Trustees under the Declaration collectively as Trustees, but not
individually or personally; and that no Trustee, officer, shareholder, employee
or agent of the Company shall be held to any personal liability, jointly or
severally, for any obligation of, or claim against, the Company. All persons
dealing with the Company, in any way, shall look only to the assets of the
Company for the payment of any sum or the performance of any obligation.
-39-
40
EXHIBITS
Exhibit
No Title Method of Filing
- - ------- ----- ----------------
3.1 Restated Declaration of Trust,
as amended............................ Incorporated by reference to Exhibit 3.1 to the
Current Report on Form 8-K filed October 19, 1994
3.2 By-Laws, as amended................... Incorporated by reference to Exhibit 3.2 to Form
10-K for the fiscal year ended December 31, 1992
4.1 1988 Stock Option Plan, as amended ... Incorporated by reference to Exhibit 10.13 to Form
10-K for the fiscal year ended December 31, 1988
4.2 Amended and Restated 1992 Equity
Incentive Plan (effective August 15,
1996)................................. Incorporated by reference to Exhibit 4 to Form 10-Q
for the quarter ended September 30, 1996
4.3 Trustee Retirement Plan............... Incorporated by reference to Exhibit 4.3 to Form
10-K for the fiscal year ended December 31, 1995.
4.4 Form of Indenture dated February 4,
1993 between The Company and Fleet
National Bank, as trustee............. Incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 (File No. 33-55386)
4.5 Form of 7% Convertible Debenture
due 1998.............................. Incorporated by reference to Exhibit 4.2 to the
Registration Statement on Form S-3 (File No. 33-55386)
4.6 Form of Fiscal Agency Agreement
dated February 4, 1993 between the
Company and Fleet National Bank
as fiscal agent....................... Incorporated by reference to Exhibit 4.5 to Form
10-K for the fiscal year ended December 31, 1993
4.7 Form of 7% Convertible Debenture
due 1998.............................. Incorporated by reference to Exhibit 4.6 to Form
10-K for the fiscal year ended December 31, 1993
4.8 Form of Fiscal Agency Agreement
dated November 15, 1993 between
the Company and Fleet National
Bank as fiscal agent.................. Incorporated by reference to Exhibit 4.7 to Form
10-K for the fiscal year ended December 31, 1993
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41
Exhibit
No Title Method of Filing
- - ------- ----- ----------------
4.9 Form of 6 7/8% Convertible
Debenture due 1998................... Incorporated by reference to Exhibit 4.8 to Form
10-K for the fiscal year ended December 31, 1993
4.10 Form of Indenture dated April 23,
1992 between The Company and
Fleet National Bank, as Trustee...... Incorporated by reference to Exhibit 4 to the
Registration Statement on Form S-3 (File No. 33-45979)
4.11 Form of 9% Convertible Debenture
due 2002............................. Incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-3 (File No. 33-45979)
4.12 Form of Indenture dated March 9,
1994 between the Company and
Shawmut Bank, as Trustee.............. Incorporated by reference to Exhibit 4 to the Registration
Statement on Form S-3 (File No. 33-50835)
4.13 Form of 7 1/2% Convertible Debenture
due 2001.............................. Incorporated by reference to Exhibit 4 to the Registration
Statement on Form S-3 (File No. 33-50835)
4.14 Form of Second Supplemental
Indenture dated as of July 28, 1995
between the Company and Fleet
National Bank, as Trustee............. Incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated July 27, 1995
4.15 Form of 8.54% Convertible Senior Note
due July 1, 2000...................... Incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated July 27, 1995
4.16 Form of 8.56% Convertible Senior Note
due July 1, 2002...................... Incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated July 27, 1995
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42
Exhibit
No Title Method of Filing
- - ------- ----- ----------------
4.17 Form of Distribution Agreement dated
August 10, 1995 between the Company,
Goldman, Sachs & Co. and other
underwriters relating to $200,000,000
of Medium-term Notes.................. Incorporated by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K dated August 8, 1995
4.18 Form of Third Supplemental Indenture
dated as of August 10, 1995 between
the Company and Fleet National Bank... Incorporated by reference to Exhibit 4.2 to the Company's
Current Report on Form 8-K dated August 8, 1995
4.19 Form of Fixed Rate Senior Medium-term
Note.................................. Incorporated by reference to Exhibit 4.3 to the Company's
Current Report on Form 8-K dated August 8, 1995
4.20 Form of Floating Rate Medium-term
Note.................................. Incorporated by reference to Exhibit 4.4 to the Company's
Current Report on Form 8-K dated August 8, 1995
4.21 Form of First Supplemental Indenture
dated as of July 26, 1995 between the
Company and Fleet National Bank....... Incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated July 13, 1995
4.22 Form of 7.375% Note due July 15,
2000.................................. Incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated July 13, 1995
4.23 Form of 7.60% Note due July 15, 2001.. Incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated July 13, 1995
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43
Exhibit
No Title Method of Filing
- - ------- ----- ----------------
4.24 Form of Fourth Supplemental Indenture
dated as of September 10, 1996 between
the Company and Fleet National Bank... Incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated September 6, 1996
10.1 Note Agreement relating to first
mortgage notes due December 1, 1997... Incorporated by reference to Exhibit 10.4 to the
Registration Statement on Form S-11 (File No. 33-20557)
10.2 Amended and Restated Lease Agreement
between Mediplex of Queens, Inc. and
QPH, Inc. dated December 30, 1986..... Incorporated by reference to Exhibit 2.2 to the Form 8-K
dated January 13, 1987
10.3 Form of Lease for Carmel, New York and
Scotia, New York facilities........... Incorporated by reference to Exhibit 10.5 to the
Registration Statement on Form S-11 (File No. 33-7483)
10.10 Amended and Restated Revolving Credit
Agreement dated as of July 21, 1995
between the Company and Via Banque.... Incorporated by reference to Exhibit 10.2 to Form
10-Q for the fiscal quarter ended September 30, 1995.
10.12 Amended and Restated Revolving Credit
Agreement dated July 21, 1995 among the
Company, various financial institutions
and Fleet Bank, National Association
and First Union National Bank of North
Carolina, as Agents................... Incorporated by reference to Exhibit 10.1 to Form
10-Q dated October 20, 1995
10.13 Agreement dated as of March 8, 1996
between the Company and Robert
Cataldo............................... Incorporated by reference to the Registration Statement on
Form S-8 (File No. 333-0891)
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44
Exhibit
No Title Method of Filing
- - ------- ----- ----------------
11 Statement Regarding Computation of Per
Share Earnings........................ Filed herewith
21 Subsidiaries of the Registrant........ Filed herewith
23 Consent of Coopers & Lybrand L.L.P.... Filed herewith
27 Financial Data Schedule............... Incorporated by reference
to Exhibit 27 to the
Company's Current Report
on Form 8-K dated
January 31, 1997.
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