[Preliminary Additional Solicitation Materials]
[To be released as soon as practicable but not sooner than on or about March
17, 1999]
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[Photo of Life Care Center of Longmont, Longmont, Colorado]
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Informational
Brochure Concerning the
Comprehensive Restructuring Plan of
The Meditrust Companies
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[Photo of La Quinta Inn & Suites, Addison, Texas]
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The Meditrust Companies are furnishing this informational brochure to our
stockholders concurrently with the Joint Proxy Statement for the Special
Meetings of Stockholders to be held on -------- -- , 1999. This informational
brochure is not a substitute for the information presented in the Joint Proxy
Statement. You are urged to read the Joint Proxy Statement, including its
Annexes, in its entirety.
Table of Contents
Page
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Summary ........................................................................ 1
Introduction ................................................................... 2
The Plan ....................................................................... 2
The Record to Date ............................................................. 3
Additional Considerations Related to the Implementation and Effects of the Plan 4
The Corporate Document Proposals ............................................... 5
Conclusion ..................................................................... 8
How to Vote .................................................................... 9
Forward Looking Statements Legend
Certain matters discussed within this informational brochure may constitute
"forward-looking statements" within the meaning of the federal securities laws.
Although Meditrust Corporation ("Meditrust") and Meditrust Operating Company
("Operating Company", and together with Meditrust, "The Meditrust Companies")
believe the statements are based on reasonable assumptions, they can give no
assurance that their expectations will be attained. Actual results and the
timing of certain events could differ materially from those projected in or
contemplated by the forward-looking statements due to a number of factors,
including, without limitation, general economic and real estate conditions, the
conditions of the capital markets at the time of the proposed spin-off of the
health care division, the identification of satisfactory prospective buyers for
the non-strategic assets which have not yet been sold and the availability of
financing for such prospective buyers, the availability of equity and debt
financing for The Meditrust Companies' capital investment program, interest
rates, competition for hotel services and health care facilities in a given
market and other risks detailed from time to time in the filings of The
Meditrust Companies with the Securities and Exchange Commission, including the
Joint Annual Report on Form 10-K/A for the year ended December 31, 1997 and
other periodic filings under the Securities Exchange Act of 1934, as amended.
Photo Captions:
Front Cover (top): Life Care Center of Longmont, Longmont, Colorado
Front Cover (bottom): La Quinta Inn & Suites, Addison, Texas
Summary
On November 12, 1998, Meditrust Corporation ("Meditrust") and Meditrust
Operating Company ("Operating Company") announced a comprehensive restructuring
plan (the "Plan"). This stockholder informational brochure contains a brief
description of the Plan, including a discussion of the status of our efforts in
implementing the Plan. As part of the Plan, the Boards of Directors of
Meditrust and Operating Company (together "The Meditrust Companies" and each a
"Company") have adopted certain proposals which will revise each of The
Meditrust Companies' corporate documents to permit us to issue unpaired shares
of capital stock, as well as if appropriate, in the future permit the Board of
Directors of each of The Meditrust Companies to waive or terminate the pairing
of our capital stock. As described in more detail in the accompanying Joint
Proxy Statement, you will be asked to approve these two important proposals at
the Special Meetings of Stockholders to be held on , , 1999. The two
proposals that will be submitted for your approval are summarized as follows:
o The Meditrust Companies' Restated Certificates of Incorporation, as
amended to date (the "Existing Certificates"), will be amended and
restated in their entirety. The existing provisions will be contained in
the Amended and Restated Certificates of Incorporation (the "Amended
Certificates") and new provisions increasing the amount of our authorized
capital stock and providing for the pairing of the common stock of
Meditrust and Operating Company with each other will be added. The Amended
Certificates will not contain any new so-called "anti-takeover" devices.
o The Pairing Agreement, as amended, by and between Meditrust and Operating
Company will be terminated. The termination of the Pairing Agreement will
not, however, terminate the paired share structure of The Meditrust
Companies because of the pairing provisions that will be added to the
Amended Certificates. The termination of the Pairing Agreement will
automatically terminate those provisions of the By-laws of each of The
Meditrust Companies that require the pairing of certain classes of The
Meditrust Companies' capital stock.
Adoption of these proposals will enable each of The Meditrust Companies to
issue unpaired shares of its capital stock. The ability to issue unpaired
shares will permit each of The Meditrust Companies to:
o more efficiently engage in capital raising and formation transactions by
matching the specific needs of each Company with the investment criteria
of the investment community;
o efficiently respond in a timely manner to the challenges presented by
recently adopted federal legislation which limits the use of the paired
share structure by providing the flexibility to adopt, subject to then
applicable law, the structure or structures best suited to serve the
long-term goals of The Meditrust Companies; and
o capitalize on further opportunities to enhance stockholder value through
acquisitions that are consistent with our growth strategy.
As part of capital raising transactions, either of The Meditrust Companies may
be permitted to issue unpaired capital stock, subject to applicable real estate
investment trust ("REIT") qualification tests. As previously announced in
connection with the Plan, these proposals may also permit certain existing
stockholders affiliated with Thomas M. Taylor & Co. and other entities and
individuals associated with certain members of the Bass family, including
Thomas M. Taylor, the Interim Chairman of the Boards of Directors of The
Meditrust Companies (the "Bass Group"), to increase their ownership in
Meditrust up to an aggregate of 13%, again subject to applicable REIT
qualification tests.
Your Boards of Directors unanimously recommend that you vote "FOR" both of the
proposals by signing, dating and promptly returning the enclosed proxy cards in
the enclosed postage-paid envelope.
The proposals and their potential effects are described fully in the
accompanying Joint Proxy Statement. This informational brochure should not be
viewed as a substitute for the Joint Proxy Statement, which you are encouraged
to read in its entirety.
Introduction
On November 12, 1998, The Meditrust Companies announced that the Boards of
Directors approved a comprehensive restructuring plan for our real estate
portfolio. The Plan is designed to strengthen The Meditrust Companies'
financial position and clarify our investment and operating strategy by
focusing on the health care and lodging business segments, our two most
prominent business segments. These segments are also the businesses that The
Meditrust Companies and our management teams know best and from which we
believe we can best create long-term value for our stockholders.
The Plan
The Plan has a number of components, several of which have been
successfully completed or are well on their way to successful completion. The
Plan, as announced on November 12, 1998, includes the following components:
"This restructuring makes strategic sense. We believe it will focus
Meditrust on its core competencies, provide financial and operating
flexibility, and enhance shareholder value." Thomas M. Taylor,
Interim Chairman of the Boards of Directors.
o Separate Primary Businesses -- The Meditrust Companies intend to pursue
the separation of the health care and lodging business segments. This
separation will be accomplished through the spin-off of a new separately
traded, publicly listed REIT, which will engage principally in the health
care financing business. After the spin-off, which The Meditrust
Companies intend to complete during the latter part of 1999, The
Meditrust Companies' stockholders will continue to hold stock in The
Meditrust Companies, which will be focused on the lodging business, as
well as stock in a newly-created, publicly traded health care REIT. We
expect that the lodging business will, concurrently with the spin-off,
change its name and the new health care REIT will retain an affiliation
to the "Meditrust" name.
o Sell Non-Strategic Assets -- The Meditrust Companies will sell over $1
billion of non-strategic assets.
o Reduce Debt Through Asset Sales -- The Meditrust Companies will use
approximately $550 million of the proceeds from the sales of
non-strategic assets to reduce The Meditrust Companies' debt.
o Settle Forward Equity Transaction -- The Meditrust Companies reached an
agreement with certain affiliates of Merrill Lynch & Co. that allows them
to complete the settlement of The Meditrust Companies' only forward
equity investment transaction ("FEIT").
o Continue to Operate in Paired Share Structure -- The Meditrust Companies
intend to continue to utilize the paired share structure to operate the
health care and lodging businesses until the completion of the spin-off.
After completion of the spin-off, The Meditrust Companies will use the
paired share structure to operate the lodging business. Because of
restrictions imposed by recently adopted federal legislation on our
growth using the paired share structure, The Meditrust Companies may need
to implement a structure other than the paired share structure. The
approval and adoption of the proposals presented in the Joint Proxy
Statement will provide The Meditrust Companies with the ability to
implement such an alternative structure for the lodging business in the
most timely manner. Implementation of the components of the Plan is not
contingent upon approval of the proposals submitted for stockholder
approval.
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o Reduce Capital Investments -- The Meditrust Companies will reduce capital
investments in new assets to reflect current industry operating
conditions.
o Reset The Meditrust Companies' Annual Dividend -- The Meditrust Companies
reset their 1999 annual dividend to $1.84 per paired common share, an
amount that is sustainable and comparable to The Meditrust Companies'
peer groups.
o Record Non-Recurring Charges -- The Meditrust Companies recorded
non-recurring charges of $248 million in the third quarter of 1998 and
approximately $100 million in the fourth quarter of 1998.
By its terms, the Plan is clearly a departure from The Meditrust
Companies' strategy of the recent past, which was to expand through a series of
acquisitions in business segments outside of the historical business of
Meditrust. Pursuant to the Plan, we have divested, or are in the process of
divesting, several of these business segments to return to our two primary
business segments, health care and lodging. The Plan will significantly
transform The Meditrust Companies from what we were just six months ago. If we
are able to successfully implement the Plan, it will result in your ownership
in two distinct and historically successful business segments, providing you
with access to the potential rewards and risks inherent in each of these
business segments.
The Record to Date
Since the announcement of the Plan approximately months ago, The
Meditrust Companies have been actively implementing its components and have
successfully completed, or will soon successfully complete, a number of the
component parts as discussed below.
"We are delivering on our promises ahead of our original schedule. These
asset sales are a key step towards settling our forward equity obligation,
reducing near-term debt obligations and strengthening our balance sheet.
We are confident that Meditrust and our stockholders will soon realize the
benefits of our comprehensive restructuring plan." David F. Benson, President
o Sale of Non-Strategic Assets -- We began actively pursuing the sale of
approximately $1 billion of non-strategic assets during the fourth
quarter of 1998. Since The Meditrust Companies announced the Plan, we
have sold (i) the Santa Anita Racetrack and its related operations for
$126 million in gross proceeds, (ii) art work acquired in the acquisition
of the Santa Anita Companies for gross proceeds of $11 million, (iii) a
fifty percent (50%) joint venture interest in the Santa Anita Fashion
Park for gross proceeds of $40 million and (iv) 58 health care properties
or health care investments for aggregate gross proceeds of $436 million.
In addition, on February 10, 1998, we entered into an agreement to sell
the Cobblestone Golf Group ("Cobblestone"), our golf division, to an
affiliate of ClubCorp, Inc. and American Golf Corporation for an
aggregate purchase price of approximately $393 million. We expect that
this sale will be consummated by the end of the first quarter of 1999.
o Reduction of Debt through Asset Sales -- We have applied substantially
all of the net proceeds from our recent sales of non-strategic assets to
the repayment of outstanding debt, including our senior credit facility,
and to the settlement of the FEIT, as described below. Our stated goal is
to reduce our outstanding debt by approximately $550 million. In January,
we repaid $24 million of mortgages and $250 million of our credit
facility, which would otherwise have been due on April 30, 1999. In
addition, we anticipate using a portion of the net proceeds from the sale
of Cobblestone to repay $250 million under our credit facility which
would otherwise be due in July, 1999.
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o Settlement of FEIT -- We have entered into a comprehensive agreement
which provides for settlement of The Meditrust Companies' FEIT with
certain affiliates of Merrill Lynch & Co. (the "Merrill Lynch Entities").
This settlement did not increase the amount of money which has been paid
or will be paid by or on behalf of The Meditrust Companies to the Merrill
Lynch Entities. We have settled a substantial portion of our FEIT in
cash. Approximately $89 million of our original $277 million FEIT
currently remains outstanding. We intend to settle this remaining portion
of our FEIT by March 31, 1999.
o Reduction of Capital Investments -- We have reduced our capital
investment program over the near term, reflecting current conditions in
the lodging and health care industries. We believe that our new strategic
focus, together with our asset sales, which include the sale of the Santa
Anita Racetrack and the pending sale of Cobblestone, will enable The
Meditrust Companies to grow under a reduced level of capital investments
through 1999 and have the financial flexibility to respond quickly to new
opportunities.
Health Care: The Meditrust Companies intend to remain one of the
leading providers of financing to the health care industry and will
continue to seek opportunities to invest or acquire in those areas
of the health care industry experiencing expansion and
profitability. Although our projected $200 million for new health
care investments in 1999 is less than our annual investments in
recent years, we believe that this level of investment is
appropriate in the current capital markets.
Lodging: One of the attributes that made La Quinta Inns, Inc. ("La
Quinta") attractive to The Meditrust Companies was the significant
capital improvements of approximately $270 million that had
occurred at La Quinta during the mid to late 1990s. Our lodging
business will continue to benefit from the opening of 57 Inns &
Suites hotels during the past 22 years and the opening in 1999 of
13 Inns & Suites hotels currently under construction. Upon
completion of the hotels currently under construction, we will own
and operate 233 La Quinta Inns and 70 La Quinta Inns & Suites
hotels, with a total of approximately 39,000 rooms. We do not
presently plan to proceed with further development efforts or to
enter new segments of the lodging industry until industry market
conditions improve. With the significant capital improvements
completed in recent years, we will focus on internal efficiencies
and growth. However, going forward, we will evaluate development
and acquisition investment opportunities as they arise.
o Reset of Annual Dividend -- The Meditrust Companies announced on November
12, 1998 that they expected their annual dividend in 1999 to be at least
$1.84 per Paired Share. The Meditrust Companies noted that the new
dividend is sustainable, is comparable to their peer groups' payout
ratios and, compared to our prior dividend, the adjustment will provide
approximately $90 million in additional cash from operations. On January
14, 1999 the Board of Directors of Meditrust declared a $.46 per share
dividend to stockholders of record on January 29, 1999 payable February
16, 1999.
Additional Considerations Related to the Implementation and Effects of the Plan
We believe that the successful implementation of the Plan is in the best
long-term interests of The Meditrust Companies and our stockholders. However,
there are a number of factors that you should be aware of in connection with
both the implementation of the Plan, as well as the effects of the Plan.
Although you are not being asked to ratify or approve the Plan, in the Joint
Proxy Statement you are being asked to approve certain proposals related to The
Meditrust Companies' corporate documents that will impact component parts of
the Plan, particularly the entities which will operate the lodging business
segment after the spin-off of the new health care REIT.
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Implementation: The Plan involves a number of component parts that require
a substantial commitment of our resources to implement. In order to
successfully implement each part of the Plan, a significant amount of the
available time and effort of the management of The Meditrust Companies must be
utilized. For example, each transaction involving the sale of a non-strategic
asset requires that the personnel who oversee that asset or group of assets not
only continue to operate that asset consistent with past practice, but also
that they prepare it for sale, meet with potential buyers, negotiate, and/or
assist in the negotiation with the ultimate buyer. In addition, The Meditrust
Companies have expended, and will continue to expend significant financial
resources to implement the Plan. Each transaction of the type described above
generally involves the payment of fees and expenses of outside professionals,
including investment bankers, attorneys, independent accountants and
consultants.
Our ability to successfully implement the Plan is also impacted by
external factors, such as the performance of the economy generally and real
estate markets in particular, the ability of The Meditrust Companies to access
the capital markets, changes in applicable law and the identification of
satisfactory buyers of non-strategic assets. We currently anticipate that the
spin-off of the new health care REIT will be completed by the end of 1999. After
the spin-off, each of the lodging and health care business segments will need to
separately access the capital markets to the extent that additional capital is
required. However, we can not be certain that the capital markets will be
amenable to the spin-off and the creation of the two distinct, separately traded
entities. In addition, changes in the capital markets, which are beyond our
control, may materially impact our ability to successfully implement the
spin-off, as well as other component parts of the Plan.
Effects: The structure of The Meditrust Companies will be significantly
altered from our structure today and from our structure six months ago. Today,
each holder of paired shares of The Meditrust Companies owns interests in a
combined business which owns and invests in health care properties and owns and
operates lodging and golf course properties. Until recently, The Meditrust
Companies also owned and operated a horse racing facility and related property.
After completion of the Plan, and assuming you continue to hold the securities
issued to you in the spin-off, you will own an equity interest in a lodging
business and in a separate health care financing business. The lodging business
and the health care financing business will be operated independently, they
will be financed separately and their securities will be traded independently
on the New York Stock Exchange. You will no longer hold an interest in either
the horse racing or golfing businesses as these businesses have been, or will
be sold. In addition, the health care financing business will be somewhat
smaller than it has been historically, as certain non-strategic assets, most of
which relate to the health care business, have been sold and the funding of new
health care investments has been reduced as part of our reduction of capital
expenditures.
Finally, assuming approval of the proposals presented in the Joint Proxy
Statement, the lodging business in which you currently hold an interest through
your ownership of paired shares will likely be restructured in response to the
recently enacted federal legislation. The ability to change to an alternative
structure will be largely impacted by the approval of the proposals presented
in the Joint Proxy Statement. Although the proposals and how they impact and
interact with the Plan are generally summarized below, we encourage you to read
the Joint Proxy Statement and the accompanying Annexes in their entirety.
The Corporate Document Proposals
Background: On November 5, 1997, the predecessor to Meditrust acquired The
Santa Anita Companies. The Santa Anita Companies enjoyed, at that time, the
benefits of a unique organizational structure referred to as a "paired share
structure." The shares of the capital stock of the two companies that made up
The Santa
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Anita Companies were "paired." As a result, these shares of capital stock sold
and traded together as a single unit and referred to as a "Paired Share." The
paired share structure provided certain benefits, at the time of the
acquisition of The Santa Anita Companies, as it linked an operating company
with a REIT. A REIT may own and lease real estate, but it generally may not
conduct an operating business on the real property that it owns. By linking a
REIT, which can own and lease real property, with an operating company, which
can operate a business on the underlying real estate, the owners of the paired
shares retained the economic benefits (and, consequently, assumed the related
risks) associated with owning and operating the real estate. Consequently,
operating profits which normally would accrue to a third party operator instead
were earned by a company which was owned by the REIT's stockholders.
Meditrust's predecessor, together with other REITs, saw the benefits that
this unique structure provided to the REIT's stockholders and acquired The
Santa Anita Companies. The acquisition was structured as a merger of Meditrust
into The Santa Anita Companies to preserve the paired share structure. As a
result, the corporate organizational and governing documents of The Santa Anita
Companies, each of which was originally prepared nearly twenty years ago,
became the corporate and organizational documents of The Meditrust Companies.
At the time of the acquisition of The Santa Anita Companies in November
1997, these organizational and governing documents were viewed as somewhat
outdated and inflexible, given the developments that had been made in corporate
practice, as well as tax law, related to REITs generally and paired share REITs
specifically. At the time, Meditrust's predecessor determined that if the
structure could be utilized immediately it should be put to use rather than
making an attempt to revise these inherited, inflexible documents. Accordingly,
the unique paired share structure was immediately implemented by The Meditrust
Companies with the announcements on January 3, 1998 and January 11, 1998,
respectively, of the acquisitions of La Quinta, an independent, publicly traded
corporation that focused on the ownership, operation and development of hotel
properties, and Cobblestone Holdings, Inc., an independent company that owned,
operated and developed golf course properties. The acquisitions of La Quinta
and Cobblestone Holdings, Inc. were consummated by The Meditrust Companies on
July 17, 1998 and May 29, 1998, respectively.
Implementation of these proposals will allow The Meditrust Companies to
adopt an alternative structure in response to the Reform Act.
Changes in the Law Diminished the Benefits of the Paired Share
Structure: On July 22, 1998, the President of the United States signed into law
the Internal Revenue Service Restructuring and Reform Act of 1998 (the "Reform
Act"). The Reform Act includes provisions which greatly diminish the ability of
the various paired share entities to continue to use this previously
grandfathered structure for further growth and value creation. Although the
acquisitions of La Quinta and Cobblestone Holdings, Inc. were "grandfathered"
(i.e., The Meditrust Companies and their stockholders could enjoy the benefits
of the paired share structure for these acquisitions), further growth by The
Meditrust Companies is substantially limited by the Reform Act. In particular,
these restrictions as a practical matter prevent the Operating Company from
operating hotels or golf courses acquired in the future either by Meditrust or
the Operating Company. Although the benefits of continued growth through the use
of the paired share structure are now limited, unless the proposals are approved
we will be forced to continue to operate and raise capital pursuant to the
existing corporate documents, which were largely intended to maintain this
paired share structure. Such limitation may over time adversely affect our
competitive position and financial condition.
The Proposed Changes to the Corporate Documents: The Meditrust Companies'
organizational and governing documents were originally drafted nearly twenty
years ago and were largely designed to, among other things, preserve the unique
paired share structure of The Santa Anita Companies. Since these corporate
documents were originally drafted and put in place, a number of changes have
occurred that caused these documents to become outdated, but more importantly,
inflexible. The Boards of Directors of The Meditrust Companies now recommend
that you approve and adopt new organizational and governing documents that will
succeed certain of the documents
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inherited from The Santa Anita Companies. The proposals will not include any
new anti-takeover devices. Rather, the proposals will make it easier to raise
capital and to respond to the challenges presented by the Reform Act and its
limitations on the continued use of the paired share structure. In addition,
the proposals may provide us with further opportunities to enhance stockholder
value.
The proposals to restructure The Meditrust Companies' corporate documents
will not add any anti-takeover devices.
If the proposals to restructure our corporate documents, which are
described in detail in the Joint Proxy Statement, are approved by The Meditrust
Companies' stockholders, they will do the following:
o Amend and restate The Meditrust Companies' Certificates of Incorporation to
increase the amount of authorized common stock and to provide for the
pairing of the capital stock of The Meditrust Companies.
o Terminate the Pairing Agreement, which will also automatically terminate
certain provisions of each of The Meditrust Companies' By-laws.
The Effect of the Proposed Changes to The Meditrust Companies' Corporate
Documents: The proposed changes to The Meditrust Companies' corporate documents
are designed principally to enable each of The Meditrust Companies to issue
unpaired shares of each of their capital stock and, when and if appropriate, to
terminate the pairing of their capital stock. The ability to issue unpaired
capital stock will permit us to engage in more flexible capital raising and
formation transactions that are not presently permitted under our existing
organizational and governing documents. Such flexibility may allow us to raise
additional capital through investments from investors that may exceed the 9.25%
Ownership Limit in the Existing Certificates. Approval and adoption of the
proposals will also permit The Meditrust Companies when, as and if appropriate
and permitted under applicable law, to raise additional capital by allowing
certain members of the Bass Group, including Thomas M. Taylor, the Interim
Chairman of the Boards of Directors of The Meditrust Companies, to increase
their holdings in Meditrust up to an aggregate of 13%. Notwithstanding the
foregoing, no assurance can be made that any such investments will be made. In
addition, the revised organizational and governing documents will permit us to
respond in a timely manner to the challenges presented by the Reform Act and
its limitations on the use of the paired share structure.
o Capital Raising -- The changes to our corporate documents will enable
The Meditrust Companies to issue unpaired securities, including
securities that are convertible into common stock, and to facilitate
capital raising. We will be able to structure offerings of our
securities that will more appropriately match each of The Meditrust
Companies' needs with the investment criteria of various segments of the
investment community. We believe our ability to structure offerings that
better meet the criteria of potential investors should have the benefit
of achieving more efficient and cost-effective capital raising.
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o Efficient and Timely Response to the Reform Act -- The changes to our
corporate documents will permit us to efficiently respond in a timely
manner to the challenges presented by the Reform Act. The Reform Act
diminishes our ability to continue to use the paired share structure for
further growth and future value creation. Our present corporate
documents do not permit us to engage in certain transactions that may be
appropriate responses to the limitations imposed by the Reform Act. For
example, one response to the limitations imposed by the Reform Act may
be to "destaple" The Meditrust Companies, for which either Meditrust or
Operating Company would issue unpaired equity securities in excess of
fifty percent of the value of the outstanding equity securities. The
independent issuance of securities is not currently permitted under The
Meditrust Companies' current corporate documents.
o Enhance Stockholder Value Through Transactions that are Consistent with
The Meditrust Companies' Focused Strategy -- The changes in The
Meditrust Companies' corporate documents will permit us, when, as and if
appropriate, to engage in transactions that will enhance stockholder
value. For example, under the proposed corporate documents, Meditrust
will be better able to structure an acquisition of a
company that fits within its growth strategy on a
fully tax-free basis.
The proposals to restructure The Meditrust Companies' corporate documents will
enable each of The Meditrust Companies to issue unpaired shares of capital stock
and, in certain circumstances, to terminate the pairing of our capital stock,
which will permit us to:
o more efficiently engage in capital raising
o efficiently respond in a timely manner to the challenges presented by
the Reform Act and its limitations on the use of the paired share
structure
o capitalize on further opportunities to enhance stockholder value
through acquisitions that are consistent with The Meditrust
Companies' growth strategy
Conclusion
In the Joint Proxy Statement, we are asking you to consider changes to our
organizational and governing documents that are designed to enable us to engage
in cost-effective capital raising and formation transactions and to respond to
the challenges presented by the Reform Act. We believe that because of the
changes in the capital markets generally, and in the real estate industry
specifically, the most cost-effective and desirable way to raise capital in the
future will be to match each of The Meditrust Companies' needs with the
criteria of potential investors. In addition, we believe that in order to
efficiently respond in a timely manner to the challenges presented by the
Reform Act, we will need to be governed by corporate documents that will
provide us the flexibility to implement a structure that will ultimately
enhance stockholder value. We believe that our current corporate documents
restrict both of these types of efforts to further our long-term goals and
enhance stockholder value. Accordingly, we have proposed the changes to the
corporate documents that are to be considered at each of our Special Meetings
of Stockholders to be held __________ , ____________ __ , 1999. We urge you to
read the accompanying Joint Proxy Statement in its entirety as you consider
these proposals. Once you have done so, we ask you to sign and return the
enclosed proxy cards as soon as possible.
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How to Vote
The Meditrust Companies' Boards of Directors unanimously recommend that
you vote "FOR" each of these proposals by signing, dating and promptly
returning the enclosed proxy cards in the enclosed postage-paid
envelope.
The vote of each stockholder is important. You are urged to mark, date and sign
the accompanying proxy cards and return them in the enclosed postage-paid
envelope as soon as possible.
You may vote either "FOR" the proposals, "AGAINST" the proposals, or
"ABSTAIN" from voting on the proposals.
If you sign and return the proxy cards without clearly indicating an
"AGAINST" vote or without clearly indicating that you "ABSTAIN" from voting,
you will be deemed to have voted "FOR" the approval and adoption of the
amendment and restatement of the Certificates of Incorporation and "FOR" the
termination of the Pairing Agreement.
If you indicate you wish to "ABSTAIN" from voting with respect to the
approval and adoption of the amendment and restatement of the Certificates of
Incorporation, it will have the same effect as a vote "AGAINST" the approval
and adoption of the amendment and restatement of the Certificates of
Incorporation.
If you indicate you wish to "ABSTAIN" from voting with respect to the
termination of the Pairing Agreement, it will have the same effect as a vote
"AGAINST" the termination of the Pairing Agreement.
The failure to return properly executed proxy cards will have the same
effect as voting "AGAINST" the approval and adoption of the amendment and
restatement of the Certificates of Incorporation and "AGAINST" the termination
of the Pairing Agreement, unless you vote in person at the Special Meetings of
Stockholders.
Detailed information about the proposals is set forth in the accompanying
Joint Proxy Statement, which you are urged to read carefully in its entirety,
including the section captioned "Certain Factors You Should Consider" beginning
on page __ of the Joint Proxy Statement. If you have any questions or need
assistance in completing your proxy cards, please call D.F. King & Co., Inc.,
our proxy solicitor, toll free at 1-800-848-3410.
YOUR VOTE IS IMPORTANT. PLEASE ACT PROMPTLY.
IMPORTANT
If your shares are held for you by a broker or bank, only your broker or
bank can vote your shares, but only after receiving specific voting
instructions from you. Accordingly, please sign and return the
accompanying voting instruction form in the enclosed envelope as soon as
possible.
Back Cover (top): La Quinta Inn, Orlando, Florida
Back Cover (bottom): Life Care Center of Las Vegas, Las Vegas, Nevada
[PHOTOGRAPH OF LA QUINTA
INNS PROPERTY IN ORLANDO, FLORIDA]
[BACK COVER]
[PHOTOGRAPH OF HEALTH CARE PROPERTY]
4938-BRO-99