1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For The Quarterly Period Ended JUNE 30, 1997
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
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
197 First Avenue
NEEDHAM HEIGHTS, MASSACHUSETTS 02194-9127
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 433-6000
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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
----- -----
As of June 30, 1997 there were outstanding 61,588,182 Shares of Beneficial
Interest, without par value.
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MEDITRUST
FORM 10-Q
INDEX
Part I. Financial Information Page(s)
-------
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1997 (unaudited)
and December 31, 1996 3
Consolidated Statements of Income for the three months ended
June 30, 1997 and 1996 (unaudited) 4
Consolidated Statements of Income for the six months ended
June 30, 1997 and 1996 (unaudited) 5
Consolidated Statements of Cash Flows for the six months ended
June 30, 1997 and 1996 (unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 7-10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11-13
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
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MEDITRUST
PART I. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1997 1996
----------- ------------
(Unaudited) (Audited)
(In thousands)
ASSETS
Real estate investments (Note 3):
Land ..................................................................... $ 83,917 $ 68,098
Buildings and improvements, net of
accumulated depreciation of $110,429
and $98,082, respectively ............................................ 1,058,131 938,162
Real estate mortgages .................................................... 1,300,748 1,181,818
---------- ----------
Total real estate investments ........................................ 2,442,796 2,188,078
Other assets, net (Note 4) ................................................... 68,983 65,893
Fees, interest and other receivables ......................................... 25,677 20,178
Cash and cash equivalents .................................................... 29,148 42,726
---------- ----------
Total assets ........................................................ $2,566,604 $2,316,875
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Indebtedness (Note 5):
Notes payable, net ........................................................ $ 495,166 $ 494,790
Convertible debentures, net ............................................... 278,512 280,813
Bank notes payable, net ................................................... 275,483 24,114
Bonds and mortgages payable, net .......................................... 59,544 59,043
---------- ----------
Total indebtedness .................................................. 1,108,705 858,760
Deferred income .............................................................. 9,130 9,716
Accrued expenses and other liabilities ....................................... 61,004 63,458
---------- ----------
Total liabilities ................................................... 1,178,839 931,934
---------- ----------
Commitments and contingencies (Notes 3 and 8)
Shareholders' equity (Notes 4, 5, 6 and 9):
Shares of beneficial interest without par value:
Unlimited shares authorized; 61,588
and 61,349 shares issued and
outstanding in 1997 and 1996, respectively ........................... 1,527,625 1,520,454
Distributions in excess of net income ................................... (139,860) (135,513)
---------- ----------
Total shareholders' equity .............................................. 1,387,765 1,384,941
---------- ----------
Total liabilities and shareholders' equity .......................... $2,566,604 $2,316,875
========== ==========
The accompanying notes, together with the Notes to the Consolidated
Financial Statements incorporated by reference in the Company's Form 10-K for
the year ended December 31, 1996, are an integral part of these financial
statements.
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MEDITRUST
CONSOLIDATED STATEMENTS OF INCOME
for the three months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
---- ----
(Dollars in thousands
except per Share amounts)
Revenues:
Rental income ................................... $33,798 $27,149
Interest income ................................. 37,216 35,024
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Total revenues ............................. 71,014 62,173
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Expenses:
Interest ........................................ 20,263 14,491
Depreciation and amortization ................... 6,879 5,760
General and administrative ...................... 1,925 1,679
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Total expenses ............................. 29,067 21,930
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Net income ......................................... $41,947 $40,243
======= =======
Net income per share, based on 61,575
and 60,665 weighted average shares
outstanding in 1997 and 1996, respectively....... $.68 $.66
==== ====
The accompanying notes, together with the Notes to the
Consolidated Financial Statements incorporated by reference in the
Company's Form 10-K for the year ended
December 31, 1996, are an integral part of these financial statements.
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MEDITRUST
CONSOLIDATED STATEMENTS OF INCOME
for the six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
---- ----
(Dollars in thousands
except per Share amounts)
Revenues:
Rental income ................................. $ 66,091 $ 50,955
Interest income ............................... 72,888 70,545
-------- --------
Total revenues ........................... 138,979 121,500
-------- --------
Expenses:
Interest ...................................... 38,378 30,596
Depreciation and amortization ................. 13,355 11,184
General and administrative .................... 4,246 3,944
-------- --------
Total expenses ........................... 55,979 45,724
-------- --------
Net income ....................................... $ 83,000 $ 75,776
======== ========
Net income per share, based on 61,509
and 57,909 weighted average shares
outstanding in 1997 and 1996, respectively ..... $1.35 $1.31
===== =====
The accompanying notes, together with the Notes to the
Consolidated Financial Statements incorporated by reference in the
Company's Form 10-K for the year ended
December 31, 1996, are an integral part of these financial statements.
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MEDITRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1997 and 1996
(Unaudited)
1997 1996
---- ----
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .................................................................... $ 83,000 $ 75,776
Depreciation of real estate ................................................... 12,346 10,214
Goodwill amortization ......................................................... 778 778
Shares issued for compensation ................................................ 1,000 720
Other depreciation, amortization and other items, net ......................... 368 886
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
AVAILABLE FOR DISTRIBUTION .................................................... 97,492 88,374
Net change in other assets and liabilities .................................... (10,664) (4,368)
--------- ---------
Net cash provided by operating activities .................................. 86,828 84,006
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from equity offering ................................................. -- 312,800
Proceeds from bank notes and mortgages payable ................................ 373,000 157,399
Repayment of bank notes payable ............................................... (121,000) (200,000)
Equity offering and debt issuance costs ....................................... (39) (16,553)
Proceeds from stock options ................................................... 3,463 4,188
Principal payments on bonds and mortgages payable ............................. (510) (462)
Distributions to shareholders ................................................. (87,346) (77,272)
--------- ---------
Net cash provided by financing activities ................................. 167,568 180,100
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of real estate and development funding ............................ (148,135) (187,222)
Investment in real estate mortgages and development
funding ..................................................................... (125,839) (114,244)
Prepayment proceeds and principal payments on real
estate mortgages ............................................................ 7,037 35,566
Working capital advances ...................................................... (485) (19,366)
Collection of receivables and repayment of working
capital advances ............................................................ 20,228
Investment in equity securities ............................................... (552)
--------- ---------
Net cash used in investing activities ..................................... (267,974) (265,038)
--------- ---------
Net decrease in cash and cash equivalents ................................. (13,578) (932)
Cash and cash equivalents at:
Beginning of period ......................................................... 42,726 44,248
--------- ---------
End of period ............................................................... $ 29,148 $ 43,316
========= =========
Supplemental disclosure of cash flow information (see Note 2).
The accompanying notes, together with the Notes to the
Consolidated Financial Statements incorporated by reference in the
Company's Form 10-K for the year ended
December 31, 1996, are an integral part of these financial statements.
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MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted in this Form 10-Q in
compliance with the Rules and Regulations of the Securities and Exchange
Commission. However, in the opinion of Meditrust (the "Company"), the
disclosures contained in this Form 10-Q are adequate to make the
information presented not misleading. See the Company's Annual Report on
Form 10-K for the year ended December 31, 1996 (and the Report on Form 8-K
dated January 31, 1997 incorporated by reference therein) for additional
information relevant to significant accounting policies followed by the
Company.
BASIS OF PRESENTATION
In the opinion of the Company, the accompanying unaudited consolidated
financial statements reflect all adjustments (consisting of normal
recurring accruals) necessary to present fairly its financial position as
of June 30, 1997 and its results of operations for each of the three- and
six-month periods ended June 30, 1997 and 1996 and cash flows for each of
the six-month periods ended June 30, 1997 and 1996. The results of
operations for the six-month period ended June 30, 1997 are not necessarily
indicative of the results which may be expected for the entire year.
2. SUPPLEMENTAL CASH FLOW INFORMATION
Six Months Ended
June 30,
-----------------
1997 1996
------ ------
(in thousands)
Interest paid during the period .......................... $36,509 $29,616
Non-cash investing and financing transactions:
Increase in real estate mortgages net of
participation reduction .............................. 128 144
Change in market value of equity securities in excess
of cost .............................................. (186)
Value of Shares issued for conversion of debentures .... 2,927 4,285
3. REAL ESTATE INVESTMENTS
During the six months ended June 30, 1997, the Company acquired 28 assisted
living facilities, one long-term care facility and one medical office
building for $106,604,000. In addition, during the six month period ended
June 30, 1997, the Company provided net funding of $3,572,000 for the
construction of three assisted living facilities and $1,400,000 for
additions to four long-term care facilities already in the portfolio. The
Company also provided net funding of $36,559,000 for ongoing construction
of facilities already in the portfolio prior to 1997.
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MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
3. REAL ESTATE INVESTMENTS, CONTINUED
Also, during the six months ended June 30, 1997, the Company provided
permanent mortgage financing of $21,689,000 for two long-term care
facilities, six assisted living facilities and one retirement living
facility. The Company also provided $6,272,000 in additions to permanent
mortgages already in the portfolio.
The Company commenced new development funding of $48,093,000 relating to
three long-term care facilities, seven assisted living facilities, and five
medical office buildings. The Company also provided $49,785,000 for ongoing
construction of facilities already in the portfolio prior to 1997.
During the six months ended June 30, 1997, the Company received principal
payments on real estate mortgages of $7,037,000.
At June 30, 1997, the Company was committed to provide additional financing
of approximately $202,089,000 relating to 30 assisted living facilities, 12
medical office buildings, and nine long-term care facilities currently
under construction, and additions to existing facilities already in the
portfolio.
4. INVESTMENT IN EQUITY SECURITIES
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 June 30, 1997 the market value of this investment was $15,851,000 and
is included in other assets in the accompanying balance sheet. The
resulting difference between the current market value and cost, $2,342,000,
is included in shareholders' equity in the accompanying balance sheet.
5. INDEBTEDNESS AND SHAREHOLDERS' EQUITY
During the six months ended June 30, 1997, $1,150,000 of principal amount
of 9% convertible debentures were converted into 42,587 Shares; $1,702,000
of principal amount of 7% convertible debentures were converted into 55,573
Shares and $75,000 of principal amount of 7.5% convertible debentures were
converted into 2,072 Shares.
The Company has a total of $280,000,000 in unsecured lines of credit,
bearing interest at the lenders' prime rate or LIBOR plus .875%, and an
unsecured short-term borrowing in the amount of $25,000,000 bearing
interest at the prime rate of a specified institution or LIBOR plus 1%. A
total of $28,000,000 was available at June 30, 1997. See Note 9 "Subsequent
Events" for additional financing transactions.
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MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
6. DISTRIBUTIONS PAID TO SHAREHOLDERS
On May 15, 1997, the Company paid a dividend of $.7125 per Share to
shareholders of record on April 30, 1997. This dividend related to the
period from January 1, 1997 through March 31, 1997.
7. NEWLY ISSUED ACCOUNTING STANDARDS
Financial Accounting Standards Board Statement No. 128 ("FAS No. 128")
"Earnings Per Share" is effective for financial statements issued for
periods ending after December 15, 1997, including interim periods. The
Company intends to adopt the requirements of this pronouncement in its
financial statements for the year ended December 31, 1997. FAS No. 128
specifies the computation, presentation and disclosure requirements for net
income per share. As stated in the Summary of Significant Accounting
Policies included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 (and the Report on Form 8-K dated January 31, 1997
incorporated by reference therein), net income per Share is calculated
using weighted average number of Shares outstanding during the year and the
affect of common stock equivalents is immaterial. FAS No. 128 also requires
the presentation of diluted net income per share which the Company was not
previously required to present under generally accepted accounting
principles.
Financial Accounting Standards Board Statement No. 130 ("FAS No. 130")
"Reporting Comprehensive Income" is effective for fiscal years beginning
after December 15, 1997, although earlier application is permitted. The
Company intends to adopt the requirements of this pronouncement in its
financial statements for the year ended December 31, 1998. FAS No. 130
establishes standards for reporting and display of comprehensive income and
its components in a full set of general-purpose financial statements. FAS
No. 130 requires that all components of comprehensive income shall be
reported in the financial statements in the period in which they are
recognized. Furthermore, a total amount for comprehensive income shall be
displayed in the financial statement where the components of other
comprehensive income are reported. The Company was not previously required
to present comprehensive income or the components thereof in its financial
statements under generally accepted accounting principals.
The Company does not believe that the implementation of FAS No. 128 or FAS
No. 130 will have a material impact on its financial statements.
8. CONTINGENCIES
On April 23, 1997, the Company and certain of its subsidiaries were served
with a complaint in an action in the Suffolk County, Massachusetts Superior
Court entitled Temkin, et al. v. Meditrust, et al., alleging that a former
borrower of the Company had transferred funds to the Company without fair
consideration at a time when the transferors were insolvent. The
plaintiffs, who are unsecured creditors of the transferors, seek damages
against the Company in the amount of approximately $6.5 million, plus
costs, attorneys fees and multiple damages. The Company believes that there
is no basis for these claims and will defend the matter vigorously.
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MEDITRUST
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
On April 13, 1997, the Company and its wholly-owned subsidiary, Meditrust
Acquisition Corporation IV (together, "Meditrust") entered into a
definitive Agreement and Plan of Merger (the "Merger Agreement") with Santa
Anita Realty Enterprises, Inc. and Santa Anita Operating Company (together,
"Santa Anita"). When the transaction is consummated, Meditrust will be
merged into Santa Anita, and shareholders of Meditrust will receive 1.2016
paired common shares of Santa Anita for each share of Meditrust they own in
a tax-free exchange of shares. Based on the closing price of Meditrust on
April 11, 1997 of $37.25 per share, the transaction will have an initial
value to the shareholders of Santa Anita of approximately $383 million or
$31.00 per paired common share. Upon completion of the merger, the
surviving corporations will be called Meditrust Corporation and Meditrust
Operating Company.
Meditrust has agreed to buy approximately 1.2 million paired common shares
of Santa Anita at $31.00 per paired common share. In addition, Santa Anita
has agreed to sell to one or more independent parties designated by
Meditrust approximately 1.0 million Santa Anita paired common shares at a
price of $31.00 per paired common share. As of June 30, 1997, there were
approximately 61.6 million shares of beneficial interest of Meditrust
outstanding and as of March 31, 1997 there were approximately 11.5 million
paired shares of common stock and approximately 867,000 paired shares of
preferred stock of Santa Anita outstanding.
The Merger Agreement also provides that, if requested by Santa Anita,
Meditrust will make available to Santa Anita $100 million (less the
purchase price of the 1.2 million paired common shares acquired by
Meditrust) to be used by Santa Anita for a cash self tender or cash
election to its shareholders at a price of $31.00 per paired common share.
The transaction, which has been approved unanimously by the Board of
Trustees of Meditrust and the Boards of Directors of Santa Anita, is
subject to regulatory approvals and approvals of the shareholders of both
Meditrust and Santa Anita. The merger is not subject to any financing
conditions. The parties intend to file proxy materials for the proposed
transaction as soon as possible. The transaction is expected to close in
the fall of 1997.
9. SUBSEQUENT EVENTS
On July 1, 1997 the Company entered into an agreement for $25,000,000 in
unsecured short-term borrowings from a lender, expiring September 27, 1997,
bearing interest at the lender's prime rate or LIBOR plus 1% (6.64% at July
28, 1997).
On July 28, 1997 the Company entered into an agreement for $35,000,000 in
unsecured short-term borrowing from a lender, expiring December 31, 1997,
bearing interest at the lender's prime rate or LIBOR plus 1%.
On August 7, 1997, the Company completed the sale of $160,000,000 of 7%
notes due August 15, 2007. The Company also completed the sale of
$100,000,000 in notes due August 15, 2002 bearing interest at LIBOR plus
.45% (6.17% on August 7, 1997), such interest is subject to reset quarterly
during the first year of the loan. Subsequent to the first year of the
loan, the character and duration of the interest rate will be determined
periodically by the Company and the underwriter. The Company also completed
the sale of $150,000,000 of 7.114% notes due August 15, 2011. The notes
were sold to a trust from which exercisable put option securities due
August 15, 2004, each representing a fractional undivided beneficial
interest in the trust, were issued. The trust has entered a call option
pursuant to which the callholder has the right to purchase the notes from
the trust on August 15, 2004 at par value. The trust also has a put option,
which it is required to exercise if the callholder does not exercise the
call option, pursuant to which the Company must repurchase the notes at par
value on August 15, 2004.
On July 8, 1997, the Company declared a dividend of $.7175 per Share
payable on August 15, 1997 to shareholders of record on July 31, 1997. This
dividend relates to the period from April 1, 1997 through June 30, 1997.
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MEDITRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenues for the three months ended June 30, 1997 were $71,014,000 compared
to $62,173,000 for the three months ended June 30, 1996, an increase of
$8,841,000 or 14.2%. Revenue growth was attributed to increased rental
income of $6,649,000 and increased interest income of $2,192,000. These
increases were principally the result of additional real estate investments
made during the past year.
For the three months ended June 30, 1997, total expenses increased by
$7,137,000 compared to the three months ended June 30, 1996. Interest
expense increased by $5,772,000 due to increases in debt outstanding
resulting from additional real estate investments made during the past
year. Depreciation and amortization increased by $1,119,000, as a result of
increased real estate investments. General and administrative expenses
increased by $246,000.
Revenues for the six months ended June 30, 1997 were $138,979,000 compared
to $121,500,000 for the six months ended June 30, 1996, an increase of
$17,479,000 or 14.4%. Revenue growth resulted from increased rental income
of $15,136,000 and increased interest income of $2,343,000, which resulted
primarily from additional real estate investments during the past twelve
months.
For the six months ended June 30, 1997, total expenses increased by
$10,255,000. Interest expense increased by $7,782,000 due to increases in
debt outstanding resulting from additional real estate investments made
during the past year. Depreciation and amortization expenses increased by
$2,171,000, as a result of increased real estate investments. General and
administrative expenses increased by $302,000.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1997, the Company's gross real estate investments totaled
approximately $2,553,225,000 consisting of 278 long-term care facilities,
26 rehabilitation hospitals, 129 retirement and assisted living facilities,
24 medical office buildings, six alcohol and substance abuse treatment
facilities and psychiatric hospitals, and one acute care hospital campus.
As of June 30, 1997, the Company's outstanding commitments for additional
financing totaled approximately $202,089,000 for the completion of 51
facilities under construction and additions to existing facilities in the
portfolio.
The Company had shareholders' equity of $1,387,765,000 and debt constituted
44% of the Company's total capitalization as of June 30, 1997.
The Company provides funding for its investments through a combination of
long-term and short-term financing including both debt and equity. The
Company obtains long-term financing through the issuance of Shares, the
issuance of long-term unsecured notes, the issuance of convertible
debentures and the assumption of mortgage notes. The Company obtains
short-term financing through the use of unsecured notes and bank lines of
credit which are replaced with long-term
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MEDITRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, Continued
LIQUIDITY AND CAPITAL RESOURCES, CONTINUED
financing as appropriate. From time to time, the Company may utilize
interest rate caps or swaps to hedge interest rate volatility. It is the
Company's objective to match mortgage and lease terms with the terms of its
borrowings. The Company seeks to maintain an appropriate spread between its
borrowing costs and the rate of return on its investments. When development
loans convert to sale/leaseback transactions or permanent mortgage loans,
the base rent or interest rate, as appropriate, is fixed at the time of
such conversion.
On April 13, 1997, Meditrust and its wholly-owned subsidiary, Meditrust
Acquisition Corporation IV (together, "Meditrust") entered into a
definitive Agreement and Plan of Merger (the "Merger Agreement") with Santa
Anita Realty Enterprises, Inc. and Santa Anita Operating Company (together,
"Santa Anita"). When the transaction is consummated, Meditrust will be
merged into Santa Anita, and shareholders of Meditrust will receive 1.2016
paired common shares of Santa Anita for each share of Meditrust they own in
a tax-free exchange of shares. Based on the closing price of Meditrust on
April 11, 1997 of $37.25 per share, the transaction will have an initial
value to the shareholders of Santa Anita of approximately $383 million or
$31.00 per paired common share. Upon completion of the merger, the
surviving corporations will be called Meditrust Corporation and Meditrust
Operating Company.
Meditrust has agreed to buy approximately 1.2 million paired common shares
of Santa Anita at $31.00 per paired common share. In addition, Santa Anita
has agreed to sell to one or more independent parties designated by
Meditrust approximately 1.0 million Santa Anita paired common shares at a
price of $31.00 per paired common share. As of June 30, 1997, there were
approximately 61.6 million shares of beneficial interest of Meditrust
outstanding and as of March 31, 1997 there were approximately 11.5 million
paired shares of common stock and approximately 867,000 paired shares of
preferred stock of Santa Anita outstanding.
The Merger Agreement also provides that, if requested by Santa Anita,
Meditrust will make available to Santa Anita $100 million (less the
purchase price of the 1.2 million paired common shares acquired by
Meditrust) to be used by Santa Anita for a cash self tender or cash
election to its shareholders at a price of $31.00 per paired common share.
The transaction, which has been approved unanimously by the Board of
Trustees of Meditrust and the Boards of Directors of Santa Anita, is
subject to regulatory approvals and approvals of the shareholders of both
Meditrust and Santa Anita. The merger is not subject to any financing
conditions. The parties intend to file proxy materials for the proposed
transaction as soon as possible. The transaction is expected to close in
the fall of 1997.
As of July 28, 1997, the Company had unsecured revolving lines of credit
expiring September 23, 1999 in the aggregate amount of $280,000,000,
bearing interest at the lender's prime rate (8.5%) or LIBOR plus .875%
(6.52% at July 28, 1997), and unsecured short-term borrowings expiring
September 27, 1997 and December 31, 1997 in the total amount of
$85,000,000, bearing interest at the lenders' prime rate or LIBOR plus 1%
(6.64% at July 28, 1997). A total of $38,000,000 was available from all
credit
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MEDITRUST
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, Continued
LIQUIDITY AND CAPITAL RESOURCES, CONTINUED
facilities at July 28, 1997.
On August 7, 1997, the Company completed the sale of $160,000,000 of 7%
notes due August 15, 2007. The Company also completed the sale of
$100,000,000 in notes due August 15, 2002 bearing interest at LIBOR plus
.45% (6.17% on August 7, 1997), such interest is subject to reset quarterly
during the first year of the loan. Subsequent to the first year of the
loan, the character and duration of the interest rate will be determined
periodically by the Company and the underwriter. The Company also completed
the sale of $150,000,000 of 7.114% notes due August 15, 2011. The notes
were sold to a trust from which exercisable put option securities due
August 15, 2004, each representing a fractional undivided beneficial
interest in the trust, were issued. The trust has entered a call option
pursuant to which the callholder has the right to purchase the notes from
the trust on August 15, 2004 at par value. The trust also has a put option,
which it is required to exercise if the callholder does not exercise the
call option, pursuant to which the Company must repurchase the notes at par
value on August 15, 2004. A portion of the net proceeds from the sale of
the notes described above will be used to repay the outstanding balance on
the unsecured revolving line of credit and other unsecured short-term
borrowings.
As of August 12, 1997, the Company has effective shelf registrations on
file with the Securities and Exchange Commission under which the Company
may issue up to approximately $146,000,000 of securities including Shares,
Preferred shares of beneficial interest ("Preferred Shares"), debt,
convertible debt and warrants to purchase Shares, Preferred Shares, debt
and convertible debt.
The Company believes that its various sources of capital are adequate to
finance its operations as well as pending property acquisitions, mortgage
financings and future dividends. For 1997, however, in the event that the
Company identifies appropriate investment opportunities, the Company may
raise additional capital through the sale of Shares or Preferred Shares or
by the issuance of additional long-term debt or through a securitization
transaction.
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MEDITRUST
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Shareholders of the Company held on May 7, 1997
(the "Annual Meeting"), the recorded vote to fix the number of trustees at
seven and to vote for the election of all nominees as listed below was as
follows:
For Against
--- -------
Abraham D. Gosman 44,271,965 165,552
David F. Benson 44,280,545 156,972
Edward W. Brooke 44,247,512 190,005
Philip L. Lowe 44,242,835 194,682
Thomas J. Magovern 44,282,039 155,478
Gerald Tsai, Jr. 44,265,377 172,140
Frederick W. Zuckerman 44,291,842 145,675
There were no abstentions.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NO. TITLE METHOD OF FILING
----- ----------------
11 Statement Regarding Computation of Per Share Earnings .... Filed herewith
27 Financial Data Schedule................................... Filed herewith
(b) Reports on Form 8-K
During the quarter ended June 30, 1997, the Company filed a current report on
Form 8-K dated April 16, 1997, which included a description of the proposed
merger with Santa Anita.
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15
MEDITRUST
PART II. OTHER INFORMATION, Continued
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDITRUST
Date: August 14, 1997 By: /s/ Laurie T. Gerber
-----------------------------------------
Laurie T. Gerber, Chief Financial Officer
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