May 18, 1998
Meditrust Corporation
197 First Avenue
Needham, Massachusetts 02194
Re: Certain Federal Income Tax Matters
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Ladies and Gentlemen:
This opinion is delivered to you in our capacity as counsel to Meditrust
Corporation, a Delaware corporation ("the Company"), in connection with a
pre-effective amendment to Registration Statement Nos. 333-47737 and
333-47737-01 filed with the Securities and Exchange Commission (the "SEC") on
Form S-4 (the "Registration Statement") on or about the date hereof regarding
the merger (the "Merger") of La Quinta Inns, Inc. ("La Quinta"), a Texas
corporation, with and into the Company pursuant to an Agreement and Plan of
Merger (the "Merger Agreement") dated as of January 3, 1998, as amended, among
La Quinta, the Company, and Meditrust Operating Company ("OpCo" and, together
with the Company, the "Companies"), a Delaware corporation.
On November 5, 1997, the Company, then known as Santa Anita Realty
Enterprises, Inc. ("Santa Anita Realty"), merged (the "Santa Anita Merger") with
Meditrust, a Massachusetts business trust ("Meditrust's Predecessor"), with the
Company as the surviving corporation. In connection with the Santa Anita Merger,
Santa Anita Realty changed its name to Meditrust Corporation, and OpCo, formerly
known as Santa Anita Operating Company and the stock of which was paired with
the stock of Santa Anita Realty, changed its name to Meditrust Operating
Company.
This opinion relates (i) to the qualification of the Company and
Meditrust's Predecessor as a real estate investment trust (a "REIT") under the
Internal Revenue Code of 1986, as amended (the "Code"), and related matters, and
(ii) the accuracy of the discussion under the heading "Federal Income Tax
Considerations" contained in the Registration Statement.
Meditrust Corporation
May 18, 1998
Page 2
In rendering the following opinions, we have reviewed the Registration
Statement relating to the Merger and the issuance of shares of stock of the
Companies and the descriptions set forth therein of the Company and its current
and proposed investments and activities. We also have examined (i) the
Certificate of Incorporation of the Company, as of the beginning of the first
taxable year for which it elected to be a REIT and as amended to date, and the
proposed amendment thereto, and the Bylaws, as amended and restated, of the
Company, (ii) the Pairing Agreement dated as of December 20, 1979, as amended,
by and between the Company and OpCo, (iii) the Merger Agreement, (iv) the
Company's federal income tax returns for each of its taxable years ended
December 31, 1994, 1995, and 1996, as filed on Forms 1120-REIT, and (v) such
other records, certificates and documents as we have deemed necessary or
appropriate for purposes of rendering the opinions set forth herein. The
foregoing documents, including the Registration Statement, are referred to
herein as the "Documents."
In rendering our opinions, we have relied upon certain factual
representations of the Company set forth in a representation letter delivered to
us in connection with our rendering of this opinion regarding (i) the manner in
which the Company has been owned and operated and will be owned and operated and
(ii) the manner in which Meditrust's Predecessor was owned and operated for
periods ending on and including the effective time of the Santa Anita Merger. We
also have relied on the statements contained in the Documents regarding the
operation and ownership of the Company, Meditrust's Predecessor and their
affiliates. We have neither independently investigated nor verified such
representations or statements, and we assume that such representations and
statements are true, correct and complete and that all representations and
statements made "to the best of the knowledge and belief" of any person(s) or
party(ies) or with similar qualification are and will be true, correct and
complete as if made without such qualification. However, we are not aware of any
facts or circumstances contrary to or inconsistent with such representations and
statements.
In rendering the opinions set forth herein, we have assumed (i) the
genuineness of all signatures on documents we have examined, (ii) the
authenticity of all documents submitted to us as originals, (iii) the conformity
to the original documents of all documents submitted to us as copies, (iv) the
conformity of final documents to all documents submitted to us as drafts, (v)
the authority and capacity of the individual or individuals who executed any
such documents on behalf of any person, (vi) the accuracy and completeness of
all records made available to us, (vii) the factual accuracy of all
representations, warranties and other statements
Meditrust Corporation
May 18, 1998
Page 3
made by all parties, and (viii) the continued accuracy of all documents,
certificates, warranties and covenants on which we have relied in rendering the
opinions set forth below and that were given or dated earlier than the date of
this letter, insofar as relevant to the opinions set forth herein, from such
earlier date through and including the date of this letter. In addition, we have
relied upon the opinions of counsel of the Company and of Meditrust's
Predecessor, each dated November 5, 1997, regarding the qualification of the
Company and of Meditrust's Predecessor as a REIT and related matters.
To the extent our opinions below relate to the qualification of
Meditrust's Predecessor or the Company as a REIT with respect to periods on or
prior to November 5, 1997 or the effect of a failure to so qualify, we have
relied upon an opinion of Nutter, McClennen & Fish, LLP ("Nutter McClennen"),
dated May 18, 1998 (the "Nutter McClennen Opinion"), rendered to the Company and
upon which we have relied with the permission of Nutter McClennen. We note that
the Nutter McClennen Opinion has concluded that the Company since its taxable
year ended December 31, 1992 through its taxable year ended December 31, 1997
was organized and operated in conformity with the requirements for qualification
and taxation as a REIT under the Code. We further note that the Nutter McClennen
Opinion has concluded that Meditrust's Predecessor since its taxable year ended
December 31, 1989 through its final taxable year was organized and operated in
conformity with the requirements for qualification and taxation as a REIT under
the Code. Although we have no reason to question the accuracy of these
conclusions, we have neither investigated nor verified these conclusions.
We note in rendering this opinion that a revocation or termination of the
Company's qualification as a REIT in its taxable years ended December 31, 1989,
1990, or 1991 could potentially have prevented the Company from qualifying as a
REIT through its taxable years ended December 31, 1994, 1995, or 1996,
respectively (even if otherwise organized and operated in conformity with the
requirements for qualification and taxation as a REIT under the Code), but would
not have precluded its qualification as a REIT for later years. This is true
because a revocation or termination of the Company's qualification as a REIT
could preclude the Company from re-electing REIT status for five years. Nutter
McClennen did not have an opportunity to examine the relevant materials
necessary to render an opinion regarding the qualification of the Company as a
REIT for the taxable years ended December 31, 1989, 1990, and 1991, and, for
that reason, was not able to render an opinion regarding the Company's
qualification as a REIT for those years. However, the Nutter McClennen Opinion
states that any revocation or termination of the Company's qualification as a
REIT in its
Meditrust Corporation
May 18, 1998
Page 4
taxable years ended December 31, 1989, 1990, or 1991 or other failure to qualify
as a REIT in such years would not have a material adverse tax effect on the
Company or its shareholders, even if such event caused the Company to fail to
qualify as a REIT in its taxable years ended December 31, 1994, 1995, or 1996.
The Nutter McClennen Opinion observes that a failure of the Company to have
qualified as a REIT in its taxable years ended December 31, 1994 and 1996 could
not have an adverse tax effect on the Company or its shareholders, because the
Company sustained a net loss for those years, as indicated on its federal income
tax returns, and thus would not have incurred any federal income tax even if it
had been precluded from qualifying as a REIT for such years. Assuming the
accuracy of the income and expenses reported on these returns, we agree with
this observation. With respect to the Company's taxable year ended December 31,
1995, the Nutter McClennen Opinion states that any failure of the Company to
have qualified as a REIT for such year would not have a material adverse tax
effect on the Company or its shareholders because the Company's tax liability
would have been nominal on a per share basis. Based upon and in reliance upon
the foregoing, we also believe that any revocation or termination of the
Company's qualification as a REIT in its taxable years ended December 31, 1989,
1990, or 1991 or other failure of the Company to qualify as a REIT in such years
would not have a material adverse tax effect on the Company or its shareholders.
* * * *
Based upon and subject to the foregoing, we are of the opinion that:
(i) The Company since its taxable year ended December 31, 1992 has
been organized and operated in conformity with the
requirements for qualification and taxation as a REIT under
the Code, and the Company's form of organization and proposed
method of operation will enable it to continue to meet the
requirements for qualification and taxation as a REIT under
the Code (including for periods following the Merger).
(ii) Meditrust's Predecessor since its taxable year ended December
31, 1989 through its final taxable year was organized and
operated in conformity with the requirements for qualification
and taxation as a REIT under the Code.
(iii) Immediately following the Merger, the Company will be exempt
from the application of Section 269B(a)(3) of the Code
pursuant to Section 136(c)(3) of the Deficit Reduction Act of
1984.
(iv) The statements in the Registration Statement set forth under
the heading "Federal Income Tax Considerations," to the extent
such information constitutes matters of law, summaries of
legal matters, or legal conclusions, have been reviewed by us
and are accurate in all material respects.
* * * *
We express no opinion herein other than the opinions expressly set
forth above. You should recognize that our opinions are not binding on a court
or the Internal Revenue Service and that a court or the Internal Revenue Service
may disagree with the opinions contained herein. Although we believe that our
opinions would be sustained if challenged, there can be no assurance that this
will be the case. The discussion and conclusions set forth above are based upon
current provisions of the Code and the Income Tax Regulations and Procedure and
Administration Regulations promulgated thereunder and existing administrative
and judicial interpretations thereof, all of which are subject to change.
Changes in applicable law could adversely affect our opinions.
This opinion is being provided to you in connection with the transactions
set forth in the Merger Agreement and may not be relied upon by any other person
other than the Company, La Quinta or their respective shareholders or used for
any other purpose without our prior written consent. We hereby consent to the
filing of this opinion as an exhibit to the Registration Statement and to the
use of the name of our firm therein and under the heading "Federal Income Tax
Considerations" and "Legal Matters" in the Registration Statement.
Very truly yours,
/s/ Goodwin, Procter & Hoar LLP
Goodwin, Procter & Hoar LLP