As filed with the Securities and Exchange Commission
on November 25, 1997
Registration Nos. 333- and 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
JOINT REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MEDITRUST CORPORATION
(Exact name of registrant as specified in governing instruments)
Delaware
(State or other jurisdiction of
incorporation or organization)
95-3520818
(I.R.S. Employer Identification No.)
197 First Avenue, Suite 300
Needham, Massachusetts 02194
(781) 433-6000
(Address, including zip code, and telephone number, including
area code,
of registrant's principal executive offices)
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DAVID F. BENSON
President
MEDITRUST CORPORATION
197 First Avenue, Suite 300
Needham, Massachusetts 02194
(781) 433-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
MEDITRUST OPERATING COMPANY
(Exact name of registrant as specified in governing instruments)
Delaware
(State or other jurisdiction of
incorporation or organization)
95-3419438
(I.R.S. Employer Identification No.)
197 First Avenue, Suite 100
Needham, Massachusetts 02194
(781) 453-8062
(Address, including zip code, and telephone number, including
area code,
of registrant's principal executive offices)
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ABRAHAM D. GOSMAN
Chairman and Chief Executive Officer
MEDITRUST OPERATING COMPANY
197 First Avenue, Suite 100
Needham, Massachusetts 02194
(781) 453-8062
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of communications to:
MICHAEL J. BOHNEN, ESQUIRE
NUTTER, McCLENNEN & FISH, LLP
One International Place
Boston, MA 02110-2699
(617) 439-2000
Approximate date of commencement of proposed sale to public: From time to time
after the Joint Registration Statement becomes effective.
--------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis
<PAGE>
pursuant to Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment plans, check
the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed Proposed
maximum maximum Amount of
Title of each class of securities Amount to offering price aggregate registration
to be registered be registered per unit offering price (1) fee(1)
- --------------------------------------------------- -------------- --------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Meditrust Corporation Common Stock
(par value $.10)................................... 650,000 $37.656 $24,476,400 $7,417.08
paired with
Meditrust Operating Company Common Stock
(par value $.10)...................................
=========================================================================================================================
</TABLE>
(1) Determined pursuant to Rule 457(c) under the Securities Act of 1933, as
amended, solely for the purpose of calculating the registration fee. Based
on the average of the high and low prices reported on the NYSE on November
18, 1997.
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 25, 1997
PROSPECTUS
650,000 Shares
[LOGO OF THE MEDITRUST COMPANIES]
Common Stock
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This Prospectus relates to 650,000 shares of Paired Common Stock, $.10 par
value per share (the "Shares"), of The Meditrust Companies. The Meditrust
Companies (the "Companies") are comprised of two companies, Meditrust
Corporation (the "REIT" or the "Corporation") and Meditrust Operating Company
(the "Operating Company"), each incorporated under the laws of Delaware. The
REIT is a real estate investment trust under the Internal Revenue Code of 1986,
as amended. The shares of common stock of the Companies, comprised of common
stock of the REIT ("REIT Common Stock") and common stock of the Operating
Company ("Operating Common Stock") are paired and traded as units consisting of
one share of each company, and are herein referred to as "Paired Common Stock."
The Shares may be offered by certain stockholders of the Companies (the "Selling
Stockholders") from time to time in transactions on the New York Stock Exchange
(the "NYSE"), in privately-negotiated transactions or a combination of such
methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or the purchasers of Shares for whom
such broker-dealers may act as agent or to whom they sell as principal or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). The Selling Stockholders purchased the Shares from the
Companies on October 2, 1997 at a price of $31.00 per share. Specific
information concerning the Selling Stockholders and their plan of distribution
is set forth under "Selling Stockholders" and "Plan of Distribution."
The Companies will not receive any of the proceeds from the sale of the
Shares. The Companies have agreed to bear certain expenses (other than the fees
and expenses, if any, of counsel or other advisors to the Selling Stockholders)
in connection with the registration of the Shares being offered and sold by the
Selling Stockholders, which the Companies estimate will be approximately
$50,000.
The Companies' shares are traded on the New York Stock Exchange under the
symbol "MT". On November 21, 1997, the closing sale price of the shares on the
New York Stock Exchange was $38.375.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
<PAGE>
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
----------
The date of this Prospectus is November __, 1997.
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AVAILABLE INFORMATION
The Companies are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission" or "SEC"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024 of the
offices of the Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, or at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Suite 1400, Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can be obtained from the principal offices of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed
rates. The Companies file information electronically with the Commission, and
the Commission maintains a Web Site that contains reports, proxy and information
statements and other information regarding registrants (including the Companies)
that file electronically with the Commission. The address of the Commission's
Web Site is (http://www.sec.gov). Reports, proxy materials and other information
concerning the Companies can also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, Room 1102, New York, New York 10005.
The Companies have filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement, copies of which may be obtained upon
payment of a fee prescribed by the Commission, or may be examined free of charge
at the principal office of the Commission in Washington, D.C.
Statements made in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and reference is made
to the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated herein by reference:
The REIT and the Operating Company
1. Joint Quarterly Report on Form 10-Q for the quarter ended September 30,
1997;
2. Joint Current Report on Form 8-K, event date November 5, 1997; and
Meditrust
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1996;
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1997;
3. Quarterly Report on Form 10-Q for the quarter ended June 30, 1997;
4. Current Reports on Form 8-K, event date January 31, 1997, event date
April 13, 1997 and event date July 30, 1997.
Santa Anita Realty Enterprises, Inc. and Santa Anita Operating Company
1. Joint Annual Report on Form 10-K, as amended by amendments on Form
10-K/A, for the fiscal year ended December 31, 1996;
2. Joint Quarterly Report on Form 10-Q for the quarter ended March 31, 1997;
3. Joint Quarterly Report on Form 10-Q for the quarter ended June 30, 1997;
4. Joint Current Reports on Form 8-K, event date January 7, 1997, event date
April 13, 1997, and event date October 2, 1997.
5. The description of the REIT Common Stock and Operating Common Stock which
are contained or incorporated by reference in the Joint Registration Statement
on Form S-4 of Santa Anita Realty Enterprises, Inc. and Santa Anita Operating
Company (Nos. 333-34831, 333-34831-01), including any amendments thereto.
All other documents filed by the Companies with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the termination of the offering of the Securities offered
hereby shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus
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<PAGE>
to the extent that a statement contained herein or in a subsequently filed
document, as the case may be, which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Companies will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
(without exhibits) of any or all documents incorporated by reference into this
Prospectus. Requests for such copies should be directed, with respect to the
REIT, to Michael S. Benjamin, Esq., Senior Vice President, Secretary and General
Counsel, Meditrust Corporation, 197 First Avenue, Suite 300, Needham Heights,
Massachusetts 02194, telephone (781) 433-6000; and with respect to the Operating
Company, to Michael J. Bohnen, Secretary, Meditrust Operating Company, 197 First
Avenue, Suite 100, Needham Heights, Massachusetts 02194, telephone (781)
453-8062.
THE MEDITRUST COMPANIES
Recent Developments
On November 5, 1997, pursuant to the Third Amended and Restated Agreement
and Plan of Merger (the "Merger Agreement"), the REIT (formerly known as Santa
Anita Realty Enterprises, Inc., ("Realty")) merged with Meditrust, a
Massachusetts business trust, with the REIT as the surviving corporation, and
the Operating Company (formerly known as Santa Anita Operating Company
("Operating")), merged with Meditrust Acquisition Company, a Massachusetts
business trust ("MAC"), with the Operating Company as the surviving corporation
(collectively, the "Mergers"). Upon completion of the Mergers, the REIT changed
its corporate name to "Meditrust Corporation," the Operating Company changed its
corporate name to "Meditrust Operating Company", and the Companies have
continued the operations of Realty, Operating, Meditrust and MAC. Unless
otherwise indicated, figures for the REIT referenced herein are those of
Meditrust.
The REIT
The REIT is a self-administered real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code"), which invests primarily
in the health care industry in locations throughout the United States and
through investments in other entities with similar facilities outside of the
United States. The REIT 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 REIT's investments take the form of permanent mortgage loans,
sale/leaseback transactions and development projects. Generally, the REIT enters
into development projects where, upon completion of the facility, the REIT's
development funding is to be replaced by either a permanent mortgage loan or a
sale/leaseback transaction with the REIT.
The REIT's net increase in gross real estate investments totaled
$431,158,000 during 1996 as a result of the REIT's entering into sale/leaseback
transactions and making permanent
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<PAGE>
mortgage loans and providing development financing. Total gross investments were
$2,286,160,000 at December 31, 1996 and $2,671,419,000 at September 30, 1997.
As of September 30, 1997, the REIT had investments in 491 facilities,
consisting of 281 long-term care facilities, 26 rehabilitation hospitals, 151
retirement and assisted living facilities, 6 psychiatric, alcohol and substance
abuse facilities, 26 medical office buildings and 1 acute care hospital. The
properties are located in 41 different states and are operated by 38 health care
companies. Of the 38 different operators, 16 are publicly-traded companies
(i.e., Sun Healthcare Group, Inc., Emeritus Corporation, Horizon/CMS Healthcare
Corporation, Harborside Healthcare Corporation, OrNda Health Corp., Columbia/HCA
Healthcare Corporation, Integrated Health Services, Inc., Alternative Living
Services, Inc., HealthSouth Rehabilitation Corporation, The Multicare Companies,
Inc., Assisted Living Concepts, Inc., Mariner Health Group, Inc., Sterling House
Corporation, Karrington HealthCare Inc., Genesis Healthcare Ventures, Inc., and
Youth Services International, Inc.), and constitute approximately 50% of the
REIT's real estate investments.
The REIT's real estate investments are either owned by the REIT or secured
by a mortgage lien. As of September 30, 1997 permanent mortgage loans
constituted 45%, sale/leaseback transactions constituted 45.6%, and development
financing constituted 9.4% of the REIT's portfolio as measured by gross real
estate investments. The leases and mortgages provide for rental or interest
rates which generally range from 9% to 13% per annum of the acquisition price or
mortgage amount. The leases and mortgages generally provide for an initial term
of 10 years, with the leases having one or more five-year renewal options. The
leases and mortgages also provide for additional rent and interest which are
generally based upon a percentage of increased revenues over specific base
period revenues of the related properties. For the year ended December 31, 1996,
the aggregate amount of additional rent and interest was approximately
$11,409,000 million compared to $9,106,000 million for the year ended December
31, 1995.
In addition, the REIT usually obtains guarantees from the parent
corporation, if any, of the operator or affiliates or individual principals of
the operator. Most obligations are backed by letters of credit, security
deposits or pledges of certificates of deposit which cover from three to twelve
months of lease or mortgage payments. In addition, permanent mortgage and
development mortgage loans generally are cross-collateralized with any other
mortgage and development loans, leases or other agreements between the REIT and
the same operator or any affiliated operators. Leases and mortgage loans
generally are cross-defaulted with any other leases or mortgages between the
REIT and the same operator or any affiliated operators. With respect to
development mortgage loans, the REIT generally requires guaranteed maximum price
construction contracts, performance completion bonds or guarantees and cost
overrun guarantees. The REIT enters into a development mortgage loan when the
REIT will also be the permanent owner or mortgage lender. In making its
investment decisions, the REIT reviews, among other criteria, the operational
viability of the facility, the experience and competency of the operator and the
financial strength of the guarantor.
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<PAGE>
The REIT also owns an approximately 400 acre parcel of land in Arcadia,
California on which Santa Anita Park, a thoroughbred horse racing facility (the
"Race track") is located, a 50% interest in the operations of the Santa Anita
Fashion Park Mall, a 1.1 million square foot regional shopping mall and Santa
Anita Medical Plaza, a six story, 85,000 square foot medical office building.
Additionally, the REIT owns one neighborhood shopping center, and a 24-acre
undeveloped land parcel in Southern California. The REIT no longer intends to
hold the neighborhood shopping center and land parcel and is seeking buyers for
these properties.
The REIT 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 REIT so complies, with limited exceptions, the REIT
will not be taxed under Federal income tax laws on that portion of its taxable
income that it distributes to its shareholders. The REIT has distributed, and
intends to continue to distribute, substantially all of its real estate
investment trust taxable income to shareholders.
In order to meet its ongoing capital requirements for additional
investments, the REIT may raise additional equity capital through the sale of
Shares, Debt Securities, Share Warrants or Debt Securities Warrants or through a
securitization transaction.
The REIT's principal executive offices are located at 197 First Avenue,
Suite 300, Needham Heights, Massachusetts 02194, and its telephone number is
(781) 433-6000.
The Operating Company
The Operating Company is engaged in thoroughbred horse racing. The
thoroughbred horse racing operation is conducted by Los Angeles Turf Club,
Incorporated ("LATC"), which leases the Race track from Realty. The Race track
is one of the premier thoroughbred horse racing venues in North America. The
Operating Company has conducted a winter live thoroughbred horse racing meet at
the Race track each year since 1934 (except for three years during World War
II). In addition, the Race track has been the site of a fall meet conducted by
Oak Tree Racing Association, which has leased the Race track from LATC since
1969. The Race track was the location of the 1986 and 1993 Breeders' Cup
Championships. The race meets held at the Race track in 1997 will offer 52
graded stakes races, the highest number offered by any racetrack in North
America.
The Race track's live races are simulcast to 16 satellite wagering sites in
Southern California, 15 sites in Northern California and 986 sites in 38 other
states and 10 foreign countries. Approximately 77% of wagering at the Race
track's 1996 winter meet was through off-site wagering. The Operating Company
believes that it is well positioned to benefit from the continued industry trend
toward satellite wagering, which has been driven by technological developments,
legislative changes and customers' desire for convenience. As described below,
shares of Operating Common Stock are paired and trade together with shares of
REIT Common Stock as a single unit on the NYSE.
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<PAGE>
The Operating Company's principal executive offices are located at 197 First
Avenue, Suite 100, Needham Heights, Massachusetts 02194, and its telephone
number is (781) 453-8062.
DESCRIPTION OF CAPITAL STOCK
The Certificate of Incorporation of the REIT, as amended (the "REIT
Charter"), authorizes the REIT to issue up to 306,000,000 shares of capital
stock, consisting of (i) 270,000,000 shares of REIT Common Stock, (ii) 6,000,000
shares of REIT Preferred Stock and (iii) 30,000,000 shares of Series Common
Stock (collectively, the "REIT Capital Stock"). The REIT Charter grants the REIT
Board of Directors the power without further shareholder authorization to create
and authorize from time to time the issuance of REIT Preferred Stock and REIT
Series Common Stock in one or more series, and to determine the provisions
applicable to each series, including the number of shares, dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of redemption
(including sinking fund provisions), redemption price or prices, and liquidation
preferences as are not prohibited by the REIT Charter or applicable law and as
are specified by the REIT Board of Directors in its discretion. As of November
11, 1997, except for Junior Participating Preferred Stock, see "Description of
Paired Common Stock--Rights Agreement" below, the REIT Board of Directors had
not created or authorized any class or series of REIT Preferred Stock or REIT
Series Common Stock. Such REIT Preferred Stock and REIT Series Common Stock may
be subject to the Pairing Agreement described below.
The Certificate of Incorporation of the Operating Company, as amended (the
"Operating Company Charter") currently authorizes the Operating Company to issue
up to 306,000,000 shares of capital stock, consisting of (i) 270,000,000 shares
of Operating Common Stock, (ii) 6,000,000 shares of Operating Preferred Stock
and (iii) 30,000,000 shares of Operating Series Common Stock. The Operating
Company Charter grants the Operating Company Board of Directors the power
without further shareholder authorization to create and authorize from time to
time the issuance of Operating Preferred Stock and Operating Series Common Stock
in one or more series, and to determine the provisions applicable to each
series, including the number of shares, dividend rights, dividend rate,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), redemption price or prices, and liquidation
preferences as are not prohibited by the Operating Company Charter or applicable
law and as are specified by the Operating Company Board of Directors in its
discretion. As of November 11, 1997, except for Junior Participating Preferred
Stock, see "Description of Paired Common Stock--Rights Agreement" below, the
Operating Company Board of Directors had not created or authorized any class or
series of Operating Preferred Stock or Operating Series Common Stock. Such
Operating Preferred Stock and Operating Series Common Stock may be subject to
the Pairing Agreement described below.
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<PAGE>
DESCRIPTION OF PAIRED COMMON STOCK
General
The Paired Common Stock is currently listed on the NYSE under the symbol
"MT". As of the close of business on November 21, 1997, there were 86,701,107
shares of Paired Common Stock outstanding.
Terms
Subject to provisions of law and the preferences of any series of preferred
stock or series common stock outstanding, holders of Paired Common Stock are
entitled to receive dividends at such times and in such amounts as may be
declared from time to time by the respective Board of Directors out of funds
legally available therefor. To maintain eligibility as a REIT, the Corporation
must in general distribute at least 95% of its "real estate investment trust
taxable income" before deduction of dividends paid (less any net long-term
capital gain and subject to certain other adjustments) to its shareholders.
Holders of Paired Common Stock are entitled to one vote for each share held
on every matter submitted to a vote of shareholders. Except as otherwise
provided by law or by the REIT Charter or Operating Company Charter or by
resolutions of the Board of Directors providing for the issue of any series of
preferred stock or series common stock, the holders of the Paired Common Stock
of each company have sole voting power.
The Pairing
Pursuant to a pairing agreement by and between the REIT and the Operating
Company, dated as of December 20, 1979, as amended (the "Pairing Agreement"),
the shares of REIT Common Stock and shares of Operating Common Stock are
transferable and tradeable only in combination as units, each unit consisting of
one share of REIT Common Stock and one share of Operating Common Stock. These
restrictions on the transfer of shares of REIT Common Stock and Operating Common
Stock are imposed by the Companies' By-Laws. The pairing is evidenced by
"back-to-back" stock certificates; that is, certificates evidencing shares of
Operating Common Stock are printed on the reverse side of certificates
evidencing shares of REIT Common Stock. The certificates bear a legend referring
to the restrictions on transfer imposed by the Companies' By-Laws. To permit
proper allocation of the consideration received in connection with the sale of
Paired Common Stock, the Pairing Agreement provides that the REIT and the
Operating Company shall, as decided from time to time but not less than once a
year, jointly make arrangements to determine the relative value of the stock of
each company.
Restrictions on Transfers
Under the Code, the REIT may not own, directly or indirectly, after
application of the attribution rules of the Code, 10% or more of the outstanding
shares of Operating Common Stock, if the REIT is to qualify as a real estate
investment trust. Moreover, REIT Common
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Stock must be held by 100 or more shareholders and 50% or more of the REIT
Common Stock may not be held by or for five or fewer individuals. The Companies'
By-Laws provide that if a shareholder obtained or obtains any ownership interest
which is not in conformity with the requirements of the Code pertaining to a
real estate investment trust the Board of Directors of the REIT or the Operating
Company may call for the purchase from such shareholder of such number of shares
sufficient to reduce his holdings to conform to the requirements of the Code.
The purchase price for the shares called for purchase shall be equal to the fair
market value of such shares as reflected in the closing price for such shares on
the principal stock exchange on which such shares are listed, or if such shares
are not listed, then the last bid quotation for shares of such stock as of the
close of business on the date fixed by the Board of Directors for such purchase.
In addition, any transfer of shares which would cause a shareholder to own, as
determined under the provisions of the Code, such an amount of the outstanding
voting power or total number of outstanding shares as would cause the REIT not
to be in conformance with the requirements of the Code shall be void ab initio;
or, if such provision is determined to be invalid, the transferee of such shares
shall be deemed to have acted as agent on behalf of the REIT or the Operating
Company, as applicable, in acquiring such shares and to hold such shares on
behalf of the REIT or Operating Company as applicable.
Rights Agreement
The REIT has distributed to each holder of REIT Common Stock, and has
authorized, with respect to each additional share of REIT Common Stock that
shall become outstanding between the date of such distribution and the earliest
of the Distribution Date, the Expiration Date (as such terms are hereinafter
defined) or the date, if any, on which Rights may be redeemed, the distribution
of one Right for each share of REIT Common Stock. Each Right entitles the
registered holder to purchase from the REIT, initially, one one-hundredth of a
share of Junior Participating Preferred Stock ("Junior Preferred Stock") at a
price of $100 (the "Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement among the REIT,
Operating Company and Boston EquiServe, as Rights Agent, dated as of June 15,
1989 (the "Rights Agreement").
Junior Preferred Stock purchasable upon exercise of the Rights will be
entitled to dividends of 100 times the dividends per share declared on REIT
Common Stock and, in the event of liquidation, will be entitled to a minimum
preferential liquidating distribution of $100 per share and an aggregate
liquidating distribution per share of 100 times the distribution made with
respect to each share of REIT Common Stock. Each share of the Junior Preferred
Stock is entitled to 100 votes on all matters submitted to a vote of
shareholders. The Junior Preferred Stock will vote together with REIT Common
Stock and in the event of any merger, consolidation or other transaction in
which REIT Common Stock is exchanged, each share of Junior Preferred Stock will
be entitled to receive 100 times the amount received per share of REIT Common
Stock.
Because of the voting, dividend and liquidation rights of the Junior
Preferred Stock, the value when issued of the one one-hundredth interest in a
share of Junior Preferred Stock
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purchasable upon exercise of each Right should approximate the value of one
share of REIT Common Stock.
Until the earlier to occur of (i) 10 business days following a public
announcement that an Acquiring Person has acquired beneficial ownership of 10%
or more of the REIT's general voting power other than pursuant to a Qualified
Offer (as defined below), the date of such public announcement being called the
"Stock Acquisition Date," or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 10% or more of the REIT's general voting power (the date of such
earlier occurrence being called the "Distribution Date"), the Rights will be
evidenced by the certificates representing REIT Common Stock and will be
transferred with and only with REIT Common Stock. The surrender for transfer of
any certificate for REIT Common Stock will also constitute the transfer of the
Rights associated with the REIT Common Stock represented by such certificate. As
soon as practicable, following the Distribution Date, separate certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of REIT Common Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on August 31, 1999 (the "Expiration Date"), unless the Expiration Date is
extended or unless the Rights are earlier redeemed or exchanged by the REIT, as
described below.
The Purchase Price payable, the number of shares or other securities or
property issuable upon exercise of the Rights, and the number of outstanding
Rights, are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, Junior Preferred Stock, (ii) upon the grant to holders of
REIT Common Stock or Junior Preferred Stock of certain rights or warrants to
subscribe for REIT Common Stock or Junior Preferred Stock at a price, or
securities convertible into REIT Common Stock or Junior Preferred Stock with a
conversion price, less than the then current per share market price, or (iii)
upon the distribution to holders of REIT Common Stock or Junior Preferred Stock
of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings or dividends payable in REIT
Common Stock) or of subscription rights or warrants (other than those referred
to above).
A Qualified Offer is a tender offer or exchange offer for all outstanding
REIT Common Stock which is determined by a majority of the independent directors
to be adequate and otherwise in the best interests of the REIT and its
shareholders.
If any person becomes an Acquiring Person other than by a purchase pursuant
to a Qualified Offer, each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will not be entitled to the benefit of such
adjustment), will thereafter have the right to receive upon exercise that number
of shares of REIT Common Stock or REIT Common Stock equivalents having a market
value of two times the exercise price of the Right. Such an adjustment will also
be made in the event that (i) an Acquiring Person merges with or otherwise
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consolidates or combines with the REIT in a transaction in which the REIT is the
surviving corporation, (ii) an Acquiring Person engages in one or more
self-dealing transactions specified in the Rights Agreement, or (iii) during
such time as there is an Acquiring Person, an event specified in the Rights
Agreement occurs which results in the Acquiring Person's ownership interest in
the REIT being increased by more than 1%.
In the event that, at any time after an Acquiring Person has become such,
the REIT is acquired in a merger or other business combination transaction
(other than a merger which follows a Qualified Offer at the same or a higher
price) or 50% or more of its consolidated assets or earning power are sold, each
holder of a Right (other than an Acquiring Person) will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right.
At any time after an Acquiring Person has become such, the Board of
Directors of the REIT may exchange the Rights (other than Rights owned by such
person or group), in whole or in part, at an exchange ratio of one share of REIT
Common Stock per Right (subject to adjustment).
The Rights Agreement provides that, during such time as the Pairing
Agreement shall remain in effect, Operating Company will issue, on a share for
share basis, Operating Common Stock or, as the case may be, Operating Junior
Preferred Stock to each person receiving REIT Common Stock or Junior Preferred
Stock upon exercise of or in exchange for one or more Rights.
With certain exceptions, no adjustments in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of REIT Common
Stock or Junior Preferred Stock, as the case may be, on the last trading day
prior to the date of exercise.
Up to and including the tenth business day after a Stock Acquisition Date,
the REIT Board of Directors may redeem the Rights in whole, but not in part, at
a price of $.001 per Right (the "Rights Redemption Price"). The redemption of
the Rights may be made effective at such time on such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Rights Redemption Price
The terms of the Rights may be amended by the REIT Board of Directors
without the consent of the holders of the Rights at any time prior to the
Distribution Date. Thereafter the Rights may be amended to make changes which do
not adversely affect the interests of the holders of the Rights, or which
shorten or lengthen time periods, subject to certain limitations set forth in
the Rights Agreement.
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Until a Right is exercised, the holder thereof, as such, will have no rights
as a REIT shareholder, including, without limitation, the right to vote or to
receive dividends.
Transfer Agent
The transfer agent and registrar for the Paired Common Stock is State Street
Bank and Trust Company, Boston, Massachusetts, acting through its servicing
agent, Boston EquiServe.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a brief and general summary of the material federal income
tax considerations of an investment in the Paired Common Stock to the extent
those considerations relate to the federal income taxation of the Corporation,
the Operating Company and its U.S. Stockholders (as defined below in "--Federal
Income Taxation of Holders of Paired Shares--Taxation of Taxable U.S.
Stockholders"). For the particular provisions that govern the federal income tax
treatment of the Corporation and its stockholders, reference is made to Sections
856 through 860 of the Code and the regulations thereunder. The following
summary is qualified in its entirety by such reference.
The statements in this discussion are based on current provisions of the
Code, Treasury Regulations, the legislative history of the Code, existing
administrative rulings and practices of the Internal Revenue Service (the
"IRS"), and judicial decisions. No assurance can be given that future
legislative, judicial, or administrative actions or decisions, which may be
retroactive in effect, will not affect the accuracy of any statements in this
Prospectus with respect to the transaction entered into or contemplated prior to
the effective date of such changes.
EACH INVESTOR IS ADVISED TO CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE
SPECIFIC TAX CONSEQUENCES TO HIM OR HER OF AN INVESTMENT IN THE COMPANIES'
SHARES.
REIT Qualification of the Corporation
General
Prior to the consummation of the Mergers, Realty and Meditrust operated in a
manner intended to allow each of them to qualify as a REIT. The Corporation
intends to operate following the Mergers in a manner so that the Corporation
will continue to qualify as a REIT. If the Corporation failed to qualify as a
REIT in any taxable year, the Corporation would be subject to federal income
taxation as if it were a domestic corporation, and the Corporation's
stockholders would be taxed in the same manner as stockholders of ordinary
corporations. In this event, the Corporation could be subject to potentially
significant tax liabilities, and the amount of cash available for distribution
to stockholders would be reduced and possibly eliminated. Moreover, the
liabilities of the Corporation following the Mergers will include any unpaid
taxes of Meditrust, including taxes resulting if Meditrust failed to qualify as
REIT for periods prior
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to the Mergers, which also could reduce or eliminate cash available for
distribution to the Corporation's stockholders following the Mergers. Unless
entitled to relief under certain Code provisions, and subject to the discussion
below regarding Section 269B(a)(3) of the Code, the Corporation also would be
disqualified from re-electing REIT status for the four taxable years following
the year during which qualification was lost.
In the opinion of management, the Corporation has been organized and
operated in conformity with the requirements for qualification and taxation as a
REIT under the Code, and the Corporation's proposed method of operation will
enable it to continue to meet the requirements for qualification and taxation as
a REIT under the Code. Qualification and taxation as a REIT depends upon the
Corporation's having met and continuing to meet, through actual annual operating
results, the distribution levels, stock ownership, and other various
qualification tests imposed under the Code. Accordingly, no assurance can be
given that the actual results of the Corporation's operations for any particular
taxable year have satisfied or will satisfy such requirements.
To qualify for tax treatment as a REIT under the Code, the Corporation must
meet the following requirements, among others:
(1) At least 95% of the Corporation's gross income each taxable year must be
derived from:
(a) rents from real property;
(b) gain from the sale or disposition of real property that is not held
primarily for sale to customers in the ordinary course of business;
(c) interest on obligations secured by mortgages on real property (with
certain minor exceptions);
(d) dividends or other distributions from, or gains from the sale of,
shares of qualified REITs that are not held primarily for sale to customers in
the ordinary course of business;
(e) abatements and refunds of real property taxes;
(f) income and gain derived from foreclosure property;
(g) most types of commitment fees related to either real property or
mortgage loans;
(h) gains from sales or dispositions of real estate assets that are not
"prohibited transactions" under the Code;
(i) dividends;
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(j) interest on obligations other than those secured by mortgages on
properties; and
(k) gains from sales or dispositions of securities not held primarily
for sale to customers in the ordinary course of business.
In addition, at least 75% of the Corporation's gross income each taxable
year must be derived from items (a) through (h) above and from income
attributable to stock or debt instruments acquired with the proceeds from the
sale of stock or certain debt obligations ("new capital") of the Corporation
received during a one-year period beginning on the day such proceeds were
received ("qualified temporary investment income").
For purposes of these requirements, the term "rents from real property" is
defined in the Code to include charges for services customarily furnished or
rendered in connection with the rental of real property, whether or not such
charges are separately stated. The term "rents from real property" also includes
rent attributable to incidental personal property that is leased under, or in
connection with, a lease of real property, provided that the rent attributable
to such personal property for the taxable year does not exceed 15% of the total
rent for the taxable year attributable to both the real and personal property
leased under such lease. The term "rents from real property" is also defined to
exclude: (i) any amount received or accrued with respect to real property, if
the determination of such amount depends in whole or in part on the income or
profits derived by any person from the property (except that any amount so
received or accrued shall not be excluded from "rents from real property" solely
by reason of being determined on the basis of a fixed percentage of receipts or
sales); (ii) any amount received or accrued, directly or indirectly, from any
person or corporation if ownership of a 10% or greater interest in the stock,
assets or net profits of such person or corporation is attributed to the
Corporation; (iii) any amount received or accrued from property that the
Corporation manages or operates or for which the Corporation furnishes services
to the tenants, which would constitute unrelated trade or business income if
received by certain tax-exempt entities, either itself or through another person
who is not an "independent contractor" (as defined in the Code) from whom the
Corporation does not derive or receive income; and (iv) any amount received or
accrued from property with respect to which the Corporation furnishes (whether
or not through an independent contractor) services not customarily rendered to
tenants, other than a de minimis amount (defined in the Code as 1% of all
amounts received or accrued with respect to the property) in properties of a
similar class in the geographic market in which the property is located. The
Corporation believes that any services furnished to tenants are not, and will
not be, of a type that would cause any rents to fail to qualify as rents from
real property, or, if so, that the amount of income derived from those
activities will not jeopardize the Corporation's REIT status.
If the Corporation should fail to satisfy the foregoing income tests but
otherwise satisfies the requirements for taxation as a REIT and if such failure
is held to be due to reasonable cause and not willful neglect and if certain
other requirements are met, then the Corporation would continue to qualify as a
REIT but would be subject to a 100% tax on the excessive unqualified income
reduced by an approximation of the expenses incurred in earning that income.
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(2) Less than 30% of the Corporation's gross income during any calendar year
beginning prior to the 1998 calendar year can be derived from the sale or
disposition of: (i) stock or securities held for less than one year; (ii)
property held primarily for sale to customers in the ordinary course of business
(other than foreclosure property); and (iii) real property (including interests
in mortgages on each property) held for less than four years (other than
foreclosure property and gains arising from involuntary conversions).
(3) At the end of each calendar quarter, at least 75% of the value of the
Corporation's total assets must consist of real estate assets (real property,
interests in real property, interests in mortgages on real property, shares in
qualified real estate investment trusts and stock or debt instruments
attributable to the temporary investment of new capital), cash and cash items
(including receivables) and government securities. With respect to securities
that are not included in the 75% asset class, the Corporation may not at the end
of any calendar quarter own either: (i) securities representing more than 10% of
the outstanding voting securities of any one issuer; or (ii) securities of any
one issuer having a value that is more than 5% of the value of the Corporation's
total assets. The Corporation's share of income earned or assets held by a
partnership in which the Corporation is a partner will be characterized by the
Corporation in the same manner as they are characterized by the partnership for
purposes of the assets and income requirements described in this paragraph (3)
and in paragraphs (1) and (2) above.
(4) The shares of the Corporation must be "transferable" and beneficial
ownership of them must be held by 100 or more persons during at least 335 days
of each taxable year (or a proportionate part of a short taxable year). More
than 50% of the outstanding stock may not be owned, directly or indirectly,
actually or constructively, by or for five or fewer "individuals" at any time
during the last half of any taxable year. For the purpose of such determination,
shares owned directly or indirectly by or for a corporation, partnership, estate
or trust are considered as being owned proportionately by its shareholders,
partners or beneficiaries; an individual is considered as owning shares directly
or indirectly owned by or for members of his family; and the holder of an option
to acquire shares is considered as owning such shares. In addition, because of
the lessor-lessee relationship between the Corporation and LATC, no person may
own, actually or constructively, 10% or more of the outstanding voting power or
total number of shares of stock of the two companies. The bylaws of Operating
Company and the Corporation preclude any transfer of shares which would cause
the ownership of shares not to be in conformity with the above requirements.
Each year the Corporation must demand written statements from the record holders
of designated percentages of its shares disclosing the actual owners of the
shares and must maintain, within the Internal Revenue District in which it is
required to file its federal income tax return, permanent records showing the
information it has thus received as to the actual ownership of such shares and a
list of those persons failing or refusing to comply with such demand.
(5) The Corporation must distribute to its shareholders dividends in an
amount at least equal to the sum of 95% of its "real estate investment trust
taxable income" before the deduction for dividends paid (i.e., taxable income
less any net capital gain and less any net income from foreclosure property or
from property held primarily for sale to customers, and subject to certain other
adjustments provided in the Code); plus (i) 95% of the excess of the net income
from
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foreclosure property over the tax imposed on such income by the Code; less (ii)
a portion of certain noncash items of the Corporation that are required to be
included in income, such as the amounts includable in gross income under Section
467 of the Code (relating to certain payments for use of property or services).
The distribution requirement is reduced by the amount by which the sum of such
noncash items exceeds 5% of real estate investment trust taxable income. Such
undistributed amount remains subject to tax at the tax rate then otherwise
applicable to corporate taxpayers. Each year, the Corporation has, or will be
deemed to have, distributed at least 95% of its real estate investment trust
taxable income as adjusted.
For this purpose, certain dividends paid by the Corporation after the close
of the taxable year may be considered as having been paid during the taxable
year. However, if the Corporation does not actually distribute each year at
least the sum of: (i) 85% of its real estate investment trust taxable income;
(ii) 95% of its capital gain net income; and (iii) any undistributed taxable
income from prior periods, then the amount by which such sums exceed the actual
distributions during the taxable year will be subject to a 4% excise tax.
If a determination (by a court or by the Internal Revenue Service) requires
an adjustment to the Corporation's taxable income that results in a failure to
meet the percentage distribution requirements (e.g., a determination that
increases the amount of the Corporation's real estate investment trust taxable
income), the Corporation may, by following the "deficiency dividend" procedure
of the Code, cure the failure to meet the annual percentage distribution
requirement by distributing a dividend within 90 days after the determination,
even though this deficiency dividend is not distributed to the shareholders in
the same taxable year as that in which income was earned. The Corporation will,
however, be liable for interest based on the amount of the deficiency dividend.
(6) The directors of the Corporation must have authority over the management
of the Corporation, the conduct of its affairs and, with certain limitations,
the management and disposition of the Corporation's property.
(7) The Corporation must have the calendar year as its annual accounting
period.
(8) The Corporation must satisfy certain procedural requirements.
Paired Shares
Section 269B(a)(3) of the Code provides that if the shares of a REIT and a
non-REIT are paired, then the REIT and the non-REIT shall be treated as one
entity for purposes of determining whether either company qualifies as a REIT.
If Section 269B(a)(3) of the Code applied to the Corporation and the Operating
Company, then the Corporation would not be eligible to be taxed as a REIT.
Section 269B(a)(3) does not apply, however, if the shares of the REIT and the
non-REIT were paired on June 30, 1983 and the REIT was taxable as a REIT on June
30, 1983. As a result of this "grandfathering" rule, Section 269B(a)(3) of the
Code does not apply to the Corporation and the Operating Company. By its terms,
this "grandfathering" rule will continue to apply to the Corporation after the
Merger. There are, however, no judicial
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or administrative authorities interpreting this "grandfathering" rule in the
context of a merger or otherwise, and this interpretation, as well as the
opinion of management regarding the Corporation's qualification as a REIT, is
based solely on the literal language of the statute. There can be no assurance
that the IRS will not seek to deny the Corporation REIT status despite its
grandfathered status. Recently, the staff of the Joint Committee on Taxation
announced its plans to look at the structure of paired-share real estate
investment trusts. Currently, there is no legislation proposed adversely
affecting the "grandfathering provisions" for paired-shared REITs. There can be
no assurance, however, that new legislation will not be proposed or that any
proposed legislation will not modify the "grandfathering provisions." If for any
reason the Corporation failed to qualify as a REIT in 1983, the benefit of the
"grandfathering" rule would not be available to the Corporation, in which case
the Corporation would not qualify as a REIT for any taxable year.
Potential Reallocation of Income
Due to the paired-share structure, the Corporation, the Operating Company,
and their respective subsidiary entities will be controlled by the same
interests. As a result, the IRS could, pursuant to Section 482 of the Code, seek
to distribute, apportion or allocate gross income, deductions, credits or
allowances between or among them if it determines that such distribution,
apportionment or allocation is necessary in order to prevent evasion of taxes or
to clearly reflect income. The Corporation and the Operating Company believe
that all material transactions between them have been negotiated and structured
with the intention of achieving an arm's-length result. It is believed that all
material transactions between the Corporation and the Operating Company, and
among them and/or their subsidiary entities, will be negotiated and structured
with the intention of achieving an arm's-length result. If true, the potential
application of Section 482 of the Code should not have a material effect on the
Corporation or the Operating Company. There can be no assurance, however, that
the IRS will not challenge the terms of such transactions, or that such
challenge would not be successful.
Effects of Compliance with REIT Requirements
Operating income derived from health care related facilities or a racetrack
does not constitute qualifying income under the REIT requirements. Accordingly,
all of the Corporation's health care facilities have been leased to lessees, and
the Corporation will continue to lease such facilities after the Mergers.
Similarly, the Corporation has leased the Race track to the Operating Company,
and the Corporation will continue to lease the Race track for so long as the
Corporation owns the Race track. Rent derived from such leases will be
qualifying income under the REIT requirements, provided several requirements are
satisfied. Among other requirements, a lease may not have the effect of giving
the Corporation a share of the net income of the lessee, and the amount of
personal property leased under the lease must not exceed the 15% rent described
above. The Corporation also may not provide services, other than customary
services, except for a de minimis amount, to the lessee or their subtenants. In
addition, the leases must also qualify as "true" leases for federal income tax
purposes (as opposed to service contracts, joint ventures or other types of
arrangements). There are, however, no controlling Treasury Regulations,
published rulings, or judicial decisions that discuss whether
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leases similar to the Corporation's leases constitute "true" leases. Therefore,
there can be no complete assurance that the IRS will not successfully assert a
contrary position.
Payments under a lease will not constitute qualifying income for purposes of
the REIT requirements if the Corporation owns, directly or indirectly, 10% or
more of the ownership interests in the relevant lessee. Constructive ownership
rules apply, such that, for instance, the Corporation is deemed to own the
assets of stockholders who own 10% or more in value of the stock of the
Corporation. The Charters are therefore designed to prevent a stockholder of the
Corporation from owning REIT stock or Operating Company stock that would cause
the Corporation to own, actually or constructively, 10% or more of the ownership
interests in a lessee (including the Operating Company). Thus, the Corporation
should never own, actually or constructively, 10% or more of a lessee. However,
because the relevant constructive ownership rules are broad and it is not
possible to monitor continually direct and indirect transfers of Paired Shares,
and because the charter provisions referred to above may not be effective, no
absolute assurance can be given that such transfers, or other events of which
the Corporation has no knowledge, will not cause the Corporation to own
constructively 10% or more of one or more lessees at some future date.
In addition to the considerations discussed above, the REIT requirements
will impose a number of other restrictions on the operations of the Corporation.
For example, net income from sales of property sold to customers in the ordinary
course of business (other than inventory acquired by reason of certain
foreclosures) is subject to a 100% tax unless eligible for a certain safe
harbor. Minimum distribution requirements also generally require the Corporation
to distribute each year at least 95% of its taxable income for the year
(excluding any net capital gain). In addition, certain asset tests limit the
Corporation's ability to acquire non-real estate assets.
Federal Income Taxation of Operating Company; Non-Controlled Subsidiaries
As a "C" corporation under the Code, the Operating Company will be subject
to U.S. federal income tax on its taxable income at corporate rates. Any income,
net of taxes, will be available for retention in Operating Company's business or
for distribution to shareholders as dividends. However, there is no tax
provision that requires Operating Company to distribute any of its after-tax
earnings and Operating Company does not expect to pay cash dividends in the
foreseeable future. As non-REIT subsidiaries, the corporate subsidiaries of the
Corporation that are not controlled by it will also be subject to federal income
tax in the same manner as the Operating Company.
State and Local Taxation
The Companies and their stockholders may be subject to state and local taxes
in various jurisdictions, including those in which it or they transact business,
own property, or reside. The state and local tax treatment of such entities or
persons may not conform to the federal income tax consequences discussed above.
Consequently, the Companies and their stockholders should
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consult their own tax advisers regarding the effect of state and local tax laws
on the ownership of Paired Shares.
Federal Income Taxation of Holders of Paired Shares
Separate Taxation
Notwithstanding that Paired Shares may only be transferred as a unit,
holders of Paired Shares will be treated for U.S. federal income tax purposes as
holding equal numbers of shares of Corporation Common Stock and of Operating
Company Common Stock. The tax treatment of distributions to stockholders and of
any gain or loss upon sale or other disposition of the Paired Shares (as well as
the amount of gain or loss) must therefore be determined separately with respect
to each share of Corporation Common Stock and each share of Operating Company
Common Stock contained within each Paired Share. The tax basis and holding
period for each share of Corporation Common Stock and each share of Operating
Company Common Stock also must be determined separately. Upon a taxable sale of
a Paired Share, the amount realized should be allocated between the Corporation
Common Stock and the Operating Company Common Stock based on their then relative
values.
Taxation of Taxable U.S. Stockholders
As used herein, the term "U.S. Stockholder" means a holder of Paired Shares
that for U.S. federal income tax purposes is (i) a citizen or resident of the
United States, (ii) a corporation, partnership, or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, (iii) an estate, the income of which is subject to U.S. federal income
taxation regardless of its source or (iv) a trust, if a court within the United
States is able to exercise primary supervision over the administration of the
trust and one or more United States persons have the authority to control all
substantial decisions of the trust and (v) is not an entity that has a special
status under the Code (such as a tax-exempt organization or a dealer in
securities).
As long as the Corporation qualifies as a REIT, distributions made to the
Corporation's taxable U.S. Stockholders out of current or accumulated earnings
and profits (and not designated as capital gain dividends) will be taken into
account by such U.S. Stockholders as ordinary income and will not be eligible
for the dividends received deduction generally available to corporations. For
purposes of determining whether distributions on Corporation Common Stock are
out of earnings and profits, earnings and profits will be allocated first to any
outstanding preferred stock of the Corporation and then allocated to its Common
Stock. Subject to the discussion below regarding changes to the capital gains
tax rates, distributions that are designated as capital gain dividends will be
taxed as capital gains (to the extent they do not exceed the Corporation's
actual net capital gain for the taxable year) without regard to the period for
which the stockholder has held his Corporation Common Stock. However, corporate
stockholders may be required to treat up to 20% of certain capital gain
dividends as ordinary income. Distributions in excess of current and accumulated
earnings and profits will not be taxable to a stockholder to the extent that
they do not exceed the adjusted basis of the stockholder's
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Corporation Common Stock, but rather will reduce the adjusted basis of such
stock. To the extent that such distributions in excess of current and
accumulated earnings and profits exceed the adjusted basis of a stockholder's
Corporation Common Stock, such distributions will be included in income as
long-term capital gain (or, in the case of individuals, trusts and estates,
mid-term capital gain if the Corporation Common Stock has been held for more
than 12 months but not more than 18 months or in the case of all taxpayers
short-term capital gain if the Corporation Common Stock has been held for 12
months or less) assuming shares are a capital asset in the hands of the
stockholder. In addition, any distribution declared by the Corporation in
October, November or December of any year and payable to a stockholder of record
on a specified date in any such month shall be treated as both paid by the
Corporation and received by the stockholder on December 31 of such year,
provided that the distribution is actually paid by the Corporation during
January of the following calendar year.
Distributions from the Operating Company up to the amount of the Operating
Company's current or accumulated earnings and profits (less any earnings and
profits allocable to distributions on any preferred stock of the Operating
Company) will be taken into account by U.S. Stockholders as ordinary income and
generally will be eligible for the dividends-received deduction for corporations
(subject to certain limitations). Distributions in excess of the Operating
Company's current and accumulated earnings and profits will not be taxable to a
holder to the extent that they do not exceed the adjusted basis of the holder's
the Operating Company's Common Stock, but rather will reduce the adjusted basis
of such Operating Company Common Stock. To the extent that such distributions
exceed the adjusted basis of a holder's the Operating Company Common Stock they
will be included in income as long-term capital gain (or, in the case of
individuals, trusts and estates, mid-term capital gain if the Operating Company
Common Stock has been held for more than 12 months but not more than 18 months
or in the case of all taxpayers, short-term capital gain if the Operating
Company Common Stock has been held for 12 months or less) assuming the shares
are a capital asset in the hands of the stockholder.
For taxable years beginning after December 31, 1997, the Corporation may
elect to retain and pay income tax on net long-term capital gains recognized
during the taxable year. If the Corporation so elects for a taxable year, its
stockholders would include in income as capital gain their proportionate share
of such of its long-term capital gains as the Corporation may designate. A
stockholder would be deemed to have paid its share of the tax paid by the
Corporation, which would be credited or refunded to the stockholder. The
stockholders' basis in its shares of Corporation Common Stock would be increased
by the amount of undistributed capital gains (less the capital gains tax paid by
the Corporation) included in the stockholder's capital gains. If the Corporation
so elects for a taxable year beginning before January 1, 1998, no such credit or
increase in basis is available to the Corporation's stockholders even though the
stockholders would still include in income as capital gain their proportionate
share of long-term capital gain designated by the Corporation.
Taxable distributions from the Corporation or the Operating Company and gain
or loss from the disposition of shares of Corporation Common Stock and Operating
Company Common Stock will not be treated as passive activity income and,
therefore, stockholders generally will not be
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able to apply any passive activity losses (such as losses from certain types of
limited partnerships in which the stockholder is a limited partner) against such
income. In addition, taxable distributions from the Corporation or the Operating
Company generally will be treated as investment income for purposes of the
investment interest deduction limitations. Capital gain dividends, capital gains
(other than short-term capital gains) from the disposition of Paired Shares and
actual or deemed distributions from either company treated as such, including
capital gains (other than short-term capital gains) recognized on account of
distributions in excess of a stockholder's basis or any deemed capital gain
distributions to a Corporation stockholder on account of retained capital gains
of the Corporation, will be treated as investment income for purposes of the
investment interest deduction limitations only if and to the extent the
stockholder so elects, in which case such capital gains will be taxed at
ordinary income rates to the extent of the election. The Corporation and the
Operating Company will notify stockholders after the close of their taxable
years as to the portions of the distributions attributable to that year that
constitute ordinary income, return of capital, and (in the case of the
Corporation) capital gain. Stockholders may not include in their individual
income tax returns any net operating losses or capital losses of the Corporation
or of the Operating Company.
The Taxpayer Relief Act of 1997 (the "Relief Act") alters the taxation of
capital gain income. Under the Relief Act, individuals, trusts and estates that
hold certain investments for more than 18 months may be taxed at a maximum
long-term capital gain rate of 20% on the sale or exchange of those investments.
Individuals, trusts and estates that hold certain assets for more than 12 months
but not more than 18 months may be taxed at a maximum mid-term capital gain rate
of 28% on the sale or exchange of those investments. The Relief Act also
provides a maximum rate of 25% for "unrecaptured section 1250 gain" for
individuals, trusts and estates, special rules for "qualified 5-year gain," as
well as other changes to prior law. The Relief Act allows the IRS to prescribe
regulations on how the Relief Act's new capital gain rates will apply to sales
of capital assets by (or interests in) "pass-thru entities," which include REITs
such as the Corporation. To date regulations have not yet been prescribed, and
it remains unclear how the Relief Act's new rates will apply to capital gain
dividends or undistributed capital gains, including, for example, the extent, if
any, to which capital gain dividends or undistributed capital gains from the
Corporation will be taxed to individuals, trusts and estates at the new rates
for mid-term capital gains and unrealized section 1250 recapture, rather than
the long-term capital gain rates. Investors are urged to consult their own tax
advisors with respect to the new rules contained in the Relief Act. No change
was made to the capital gains rate or holding period for corporations under the
Relief Act.
Taxation of Stockholders on the Disposition of Paired Shares
In general, and assuming the taxpayer has the same holding period for the
Corporation Common Stock and the Operating Company Common Stock, any gain or
loss realized upon a taxable disposition of Paired Shares by a stockholder who
is not a dealer in securities will be treated as long-term capital gain or loss
if the Paired Shares have been held for more than 12 months, (or, in the case of
individuals, trusts and estates, mid-term capital gain or loss if the Paired
Shares have been held for more than 12 months but not more than 18 months, and
long-term capital gain or loss if the Paired Shares have been held for more than
18 months) and
-22-
<PAGE>
otherwise as short-term capital gain or loss. In addition, any loss upon a sale
or exchange of Corporation Common Stock by a stockholder who has held such stock
for six months or less (after applying certain holding period rules), will be
treated as a long-term capital loss to the extent of distributions from the
Corporation or undistributed capital gains required to be treated by such
stockholder as long-term capital gain. All or a portion of any loss realized
upon a taxable disposition of Paired Shares may be disallowed if other Paired
Shares are purchased within 30 days before or after the disposition.
Information Reporting Requirements and Backup Withholding
The Corporation and the Operating Company will each report to their U.S.
Stockholders and the IRS the amount of distributions paid during each calendar
year, and the amount of tax withheld, if any. Under the backup withholding
rules, a stockholder may be subject to backup withholding at the rate of 31%
with respect to distributions paid unless such holder (i) is a corporation or
comes within certain other exempt categories and, when required, demonstrates
this fact or (ii) provides a taxpayer identification number, certifies as to no
loss of exemption from backup withholding and otherwise complies with the
applicable requirements of the backup withholding rules. A stockholder who does
not provide the Corporation and the Operating Company with his, her or its
correct taxpayer identification number also may be subject to penalties imposed
by the IRS. Any amount paid as backup withholding will be creditable against the
stockholder's income tax liability. In addition, the Corporation may be required
to withhold a portion of capital gain distributions to any stockholders who fail
to certify their non-foreign status to the Corporation.
Taxation of Tax-Exempt Stockholders
Tax-exempt entities, including qualified employee pension and profit sharing
trusts and individual retirement accounts ("Exempt Organizations"), generally
are exempt from federal income taxation. They are, however, subject to taxation
on their unrelated business taxable income ("UBTI"). While many investments in
real estate generate UBTI, amounts distributed by the Corporation to Exempt
Organizations generally should not constitute UBTI, nor should dividends paid by
the Operating Company generally constitute UBTI. However, if an Exempt
Organization finances its acquisition of Paired Shares with debt, a portion of
its income from the Corporation and the Operating Company will constitute UBTI
pursuant to the "debt-financed property" rules. Furthermore, social clubs,
voluntary employee benefit associations, supplemental unemployment benefit
trusts, and qualified group legal services plans that are exempt from taxation
under paragraphs (7), (9), (17), and (20), respectively, of section 501(c) of
the Code are subject to different UBTI rules, which generally will require them
to characterize distributions from the Corporation and the Operating Company as
UBTI.
Investors are urged to consult their own tax advisors with respect to the
appropriateness of an investment in the Shares offered hereby and with respect
to the tax consequences arising under federal law and the laws of any state,
municipality or other taxing jurisdiction, including tax consequences resulting
from such investor's own tax characteristics. In particular, foreign investors
should consult their own tax advisors concerning the tax consequences of an
investment
-23-
<PAGE>
in the Corporation and Operating Company including the possibility of U.S.
income tax withholding on distributions.
SELLING STOCKHOLDERS
The Selling Stockholders listed in the table below acquired their Shares
from the Companies on October 2, 1997 in a private placement at a price of
$31.00 per Share. The purchase price for the Shares was negotiated as part of
the Merger Agreement and was determined on the basis of the Merger
consideration, which was valued at $31.00 per paired share of The Santa Anita
Companies.
The following table sets forth the names of the Selling Stockholders, the
number of shares of Paired Common Stock owned beneficially by each of them as of
November 21, 1997, and the number of Shares which may be offered by each of them
pursuant to this Prospectus. This information is based upon information provided
by the Selling Stockholders.
<TABLE>
<CAPTION>
Shares Beneficially Shares Shares Beneficially
Owned Prior to Being Owned After
Name Offering Offered Offering (2)
---- ------------------- ------- -------------------
Number Percent (1) Number Percent (1)
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Integrity Partners, L.P................. 200,000 * 200,000 0 0
Cerberus Partners, L.P.................. 200,000 * 200,000 0 0
Brett Grimes............................ 10,000 * 10,000 0 0
Drew Dusebout........................... 10,000 * 10,000 0 0
John Dennis............................. 50,000 * 50,000 0 0
Commonwealth Life Insurance Company
(Teamsters - Camden non-enhanced)....... 180,000 * 180,000 0 0
</TABLE>
- ----------
* Less than one percent.
(1) Based on 86,701,107 shares of Paired Common Stock outstanding on
November 21, 1997.
PLAN OF DISTRIBUTION
The Companies have been advised that the Selling Stockholders may sell the
Shares from time to time in transactions on the NYSE, in privately negotiated
transactions or a combination of such methods of sale, at fixed prices which may
be changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders or the
purchasers of the Shares for whom such
-24-
<PAGE>
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions).
The Selling Stockholders and any broker-dealers who act in connection with
the sale of Shares hereunder may be deemed to be "underwriters" as that term is
defined in the Securities Act, and any commissions received by them and profit
on any resale of the Shares as principal might be deemed to be underwriting
discounts and commissions under the Securities Act.
The Companies have agreed to indemnify the Selling Stockholders against
certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the issuance of the Shares offered hereby will be passed
upon by Nutter, McClennen & Fish, LLP, One International Place, Boston,
Massachusetts 02110. In addition, Nutter, McClennen & Fish, LLP will pass on
certain Federal income tax matters relating to the Companies.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Michael J. Bohnen, a partner in the law firm Nutter, McClennen & Fish, LLP,
currently serves as Secretary of Operating Company. Nutter, McClennen & Fish,
LLP, serves as counsel to the Registrants, and has rendered a legal opinion with
respect to the validity of the shares being offered pursuant to this
Registration Statement.
EXPERTS
The consolidated financial statements of Santa Anita Realty Enterprises,
Inc. and Santa Anita Operating Company (together, "The Santa Anita Companies"),
at December 31, 1995 and 1996 and for each of the three years in the period
ended December 31, 1996 incorporated in this Registration Statement by reference
to the Annual Report on Form 10-K of The Santa Anita Companies, as amended by
amendments on Form 10-K/A (the "Santa Anita Form 10-K") have been audited by
Ernst & Young LLP, independent accountants, as set forth in their report thereon
included therein and incorporated herein by reference. The financial statements
of Anita Associates and the consolidated financial statements of H-T Associates
as of December 31, 1996 and 1995 and for each of the years in the three year
period ended December 31, 1996, both incorporated by reference in this
Registration Statement by reference to the Santa Anita Form 10-K, have been
audited by KPMG Peat Marwick LLP, independent accountants, as set forth in their
reports thereon included therein and incorporated herein by reference. The
report of KPMG Peat Marwick LLP on H-T Associates, dated February 10, 1997,
contains an explanatory paragraph that states that the partnership's primary
subsidiary is in technical default on its notes payable at December 31, 1996. As
such, those notes may be callable at the lender's discretion. This technical
default raises substantial doubt about the Partnership's ability to continue as
a going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty. See the
financial statements of H-T Associates
-25-
<PAGE>
incorporated by reference into the Santa Anita Form 10-K. Such financial
statements are incorporated herein in reliance upon such reports given upon the
authority of such firms as experts in accounting and auditing.
The consolidated financial statements and the related financial statement
schedules incorporated in this Registration Statement by reference from
Meditrust's Current Report on Form 8-K dated January 31, 1997 and Annual Report
on Form 10-K for the fiscal year ended December 31, 1996 have been audited by
Coopers & Lybrand L.L.P., independent accountants, as stated in their reports,
which are incorporated herein by reference, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
-26-
<PAGE>
- --------------------------------------------------------------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representations, other than those herein, in
connection with this offering and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Companies or any other person. This Prospectus does not constitute an offer to
sell, or solicitation of an offer to buy, any of the Securities in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus at any time
does not imply that the information in the Prospectus is correct as of any time
subsequent to its date.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
Available Information.............. 3
Incorporation of Certain
Documents by Reference........ 4
The Meditrust Companies......... 5
Description of Capital Stock...... 8
Description of Paired
Common Stock.................... 9
Federal Income Tax
Considerations..................... 13
Selling Stockholders................ 24
Plan of Distribution................. 24
Legal Matters........................ 25
Interests of Named Experts
and Counsel........................ 25
Experts................................ 25
----------
MEDITRUST CORPORATION
MEDITRUST OPERATING COMPANY
PROSPECTUS
November __, 1997
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
Registration fee.................................. $ 7,417.08
New York Stock Exchange fee............... 15,000.00
Printing fees and expenses.................... 5,000.00
Accounting fees and expenses................ 5,000.00
Blue sky fees and expenses
(including legal fees)......................... 10,000.00
Miscellaneous.................................... 7,582.92
----------
Total.............................................. $50,000.00
* Fees and expenses are estimated with the exception of the registration fee.
Item 15. Indemnification of Directors and Officers.
As permitted by Section 102 of the General Corporation Law of Delaware (the
"GCL"), both the REIT Charter and the Operating Company Charter eliminate
personal liability of its respective directors to such company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for: (i) any breach of the duty of loyalty to such company or its
stockholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law; (iii) liability under
Section 174 of the GCL relating to certain unlawful dividends and stock
repurchases; or (iv) any transaction from which the director derived an improper
personal benefit.
As permitted by Section 145 of the GCL, both the REIT's By-laws and the
Operating Company's By-laws provide for indemnification of directors and
officers (and permit the respective Boards of Directors to provide for
indemnification of employees and agents) of such Registrant against all costs,
charges, expenses, liabilities and losses (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and other amounts paid in settlement)
actually and reasonably incurred by them in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, in which any such person was or is a party or
is threatened to be made a party, if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interest of such Registrant and, with respect to any criminal action or
proceeding, if such person had no reasonable cause to believe his conduct was
unlawful. In the case of an action or suit by or in the right of a Registrant,
such a person may be indemnified only for expenses (including attorneys fees)
and may not be
II-1
<PAGE>
indemnified in respect of any claim, issue or matter as to which he has been
adjudged liable for negligence or misconduct in the performance of his duty to
the respective Registrant, unless and only to the extent the court in which such
action or suit was brought determines that such person is fairly and reasonably
entitled to indemnity for such expenses as such court may deem proper. In each
case, indemnification of an officer or director shall be made only upon specific
authorization of a majority of disinterested directors, by written opinion of
independent legal counsel or by the stockholders, unless the officer, or
director has been successful on the merits or otherwise in defense of any such
action or suit, in which case he shall be indemnified without such
authorization. Both the REIT's By-laws and the Operating Company's By-laws
require such Registrant to pay the expenses incurred by a director or officer in
defending or investigating a threatened or pending action, suit or proceeding in
advance of the final disposition of such action, suit or proceeding upon receipt
by such Registrant of an undertaking by or on behalf of such director or officer
to repay such amount if it is ultimately determined that he is not entitled to
indemnification and permit such Registrant to advance such expenses to other
employees and agents of such Registrant upon such terms and conditions as are
specified by the respective Registrant's Board of Directors. The advancement of
expenses, as well as indemnification, pursuant to each Registrant's Bylaws is
not exclusive of any other rights which those seeking indemnification or
advancement of expenses from such Registrant may have.
Individual indemnification agreements (the "Indemnification Agreements")
have been entered into by each of the REIT and the Operating Company with
certain of its respective directors and officers. The Indemnification Agreements
provide for indemnification to the fullest extent permitted by law and provide
contractual assurance to directors and officers that indemnity and advancement
of expenses will be available to them regardless of any amendment or revocation
of such Registrant's Bylaws.
Both the REIT's By-laws and the Operating Company's By-laws permit such
Registrant to purchase and maintain insurance on behalf of any director,
officer, employee or agent of such Registrant against liability asserted against
him or her in any such capacity, whether or not such Registrant would have the
power to indemnify him against such liability under the provisions of the
Bylaws. Both the REIT and the Operating Company maintain liability insurance
providing officers and directors with coverage with respect to certain
liabilities.
II-2
<PAGE>
Item 16. Exhibits
The following is a list of exhibits filed as part of this Registration
Statement (numbering corresponds to numbering in Item 601 of Regulation S-K).
<TABLE>
<CAPTION>
Exhibit Description
No. -----------
- ------
<S> <C>
4.1 Pairing Agreement by and between Meditrust Corporation (formerly known
as Santa Anita Realty Enterprises, Inc.) and Meditrust Operating Company
(formerly known as Santa Anita Operating Company), dated as of December
20, 1979 (incorporated by reference to Exhibit 5 to Joint Registration
Statement on Form 8-A of Santa Anita Operating Company filed February
5, 1980).
4.2 First Amendment to Pairing Agreement, by and between Meditrust
Corporation and Meditrust Operating Company, dated November 6, 1997
(incorporated by reference to Exhibit 4.4 to Joint Registration Statement on
Form S-8 of Meditrust Corporation and Meditrust Operating Company filed
November 7, 1997).
4.3 Rights Agreement, dated June 15, 1989, among Meditrust Corporation
(formerly known as Santa Anita Realty Enterprises, Inc.), Meditrust
Operating Company (formerly known as Santa Anita Operating Company),
and Boston EquiServe, as Rights Agent (incorporated by reference to Exhibit
2.1 to Joint Registration Statement on Form 8-A of Santa Anita Realty
Enterprises, Inc., filed June 19, 1989).
4.4 Appointment of Boston EquiServe as Rights Agreement, dated
October 24, 1997 (incorporated by reference to Exhibit 4.6 to
Joint Registration Statement on Form S-8 of Meditrust
Corporation and Meditrust Operating Company, filed November 7,
1997).
5 Opinion letter of Nutter, McClennen & Fish, LLP
8 Opinion letter of Nutter, McClennen & Fish, LLP regarding tax matters
II-3
<PAGE>
23.1 Consents of Nutter, McClennen & Fish, LLP (included in Exhibits 5 and 8)
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Ernst & Young LLP
23.4 Consent of KPMG Peat Marwick LLP
23.5 Consent of KPMG Peat Marwick LLP
24.1 Meditrust Corporation Power of Attorney (included in this Joint Registration
Statement under "Meditrust Corporation Signatures")
24.2 Meditrust Operating Company Power of Attorney (included in this
Registration Statement under "Meditrust Operating Company Signatures")
</TABLE>
- ----------
Item 17. Undertakings.
(a) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-4
<PAGE>
MEDITRUST CORPORATION SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
Meditrust Corporation certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Joint Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Needham, Commonwealth of
Massachusetts, as of November 25, 1997.
MEDITRUST CORPORATION
By: /s/ David F. Benson
-----------------------------------
Name: David F. Benson
Title: Director, President and Treasurer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and
appoints David F. Benson and Michael S. Benjamin his or her true and lawful
attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Joint Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Joint Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Abraham D. Gosman Chairman of the Board November 25, 1997
- -------------------------
Abraham D. Gosman
II-5
<PAGE>
/s/ David F. Benson Director, President November 25, 1997
- -------------------------- and Treasurer
David F. Benson (Principal Executive Officer)
/s/ Laurie T. Gerber Chief Financial Officer November 25, 1997
- -------------------------- (Principal Financial and
Laurie T. Gerber Accounting Officer)
/s/ Donald J. Amaral Director November 25, 1997
- --------------------------
Donald J. Amaral
- -------------------------- Director
William C. Baker
/s/ Edward W. Brooke Director November 25, 1997
- --------------------------
Edward W. Brooke
/s/ C. Gerald Goldsmith Director November 25, 1997
- --------------------------
C. Gerald Goldsmith
- -------------------------- Director
J. Terrence Lanni
/s/ Phillip L. Lowe Director November 25, 1997
- --------------------------
Phillip L. Lowe
/s/ Thomas J. Magovern Director November 25, 1997
- --------------------------
Thomas J. Magovern
/s/ Gerald Tsai, Jr. Director November 25, 1997
- --------------------------
Gerald Tsai, Jr.
</TABLE>
II-6
<PAGE>
MEDITRUST OPERATING COMPANY SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Meditrust
Operating Company certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Joint Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Needham, Commonwealth of Massachusetts
as of November 25, 1997.
MEDITRUST OPERATING COMPANY
By: /s/ Abraham D. Gosman
-----------------------------------------
Name: Abraham D. Gosman
Title: Chairman of the Board,
Chief Executive Officer and Treasurer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Michael J. Bohnen and Paul R. Eklund his or her true and lawful
attorneys-in-fact and agents, each acting alone, with full powers of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Joint Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, each acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Joint
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C> <C>
/s/ Abraham D. Gosman Chairman of the Board,
- --------------------------- Chief Executive Officer
Abraham D. Gosman and Treasurer
(Principal Executive, Financial
and Accounting Officer) November 25, 1997
II-7
<PAGE>
/s/ Donald J. Amaral Director November 25, 1997
- -----------------------------
Donald J. Amaral
/s/ David S. Benson Director November 25, 1997
- -----------------------------
David S. Benson
/s/ Edward W. Brooke Director November 25, 1997
- -----------------------------
Edward W. Brooke
- ----------------------------- Director
James P. Conn
- ----------------------------- Director
John C. Cushman
/s/ C. Gerald Goldsmith Director November 25, 1997
- -----------------------------
C. Gerald Goldsmith
/s/ Phillip L. Lowe Director November 25, 1997
- -----------------------------
Phillip L. Lowe
/s/ Thomas J. Magovern Director November 25, 1997
- -----------------------------
Thomas J. Magovern
/s/ Gerald Tsai, Jr. Director November 25, 1997
- -----------------------------
Gerald Tsai, Jr.
</TABLE>
399298_3.WP6
II-8
EXHIBIT 5
November 25, 1997
12742-40
Meditrust Corporation
197 First Avenue, Suite 300
Needham, MA 02194
Meditrust Operating Company
197 First Avenue, Suite 100
Needham, MA 02194
Gentlemen:
Reference is made to the Joint Registration Statement on Form S-3 (the
"Registration Statement"), which Meditrust Corporation, a Delaware corporation,
and Meditrust Operating Company, a Delaware corporation (together, the
"Companies"), have filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to
650,000 shares of the Companies' paired common stock, par value $.10 (the
"Shares"), to be offered from time to time by certain selling stockholders as
set forth in the Registration Statement.
We have acted as counsel for the Companies in connection with the
Registration Statement and are familiar with the proceedings taken and proposed
to be taken by the Companies in connection with the authorization, registration,
sale and issuance of the Shares. We have examined the Certificates of
Incorporation and By-laws of each of the Companies and all amendments thereto,
and certificates of public officials and such other documents, records and
materials as we have deemed necessary in connection with this opinion letter.
Based upon the foregoing, and in reliance upon information from time to time
furnished to us by the Companies' officers, directors and agents, we are of the
opinion that:
The Shares have been duly authorized by all necessary corporate action
on the part of the Companies, have been validly issued, and are fully paid and
non-assessable.
<PAGE>
We understand that this opinion letter is to be used in connection with
the Registration Statement as finally amended, and hereby consent to the filing
of this opinion letter with and as a part of the Registration Statement as so
amended, and to the reference to our firm in the Prospectus under the heading
"Legal Matters." It is understood that this opinion letter is to be used in
connection with the offer and sale of the Shares only while the Registration
Statement is effective as so amended and as it may be amended from time to time
as contemplated by Section 10(a)(3) of the Securities Act.
Very truly yours,
Nutter, McClennen & Fish, LLP
MJB/PRE/NCH/nab
EXHIBIT 8
November 25, 1997
12742-40
Meditrust Corporation
197 First Avenue, Suite 300
Needham, MA 02194
Gentlemen:
You have requested our opinion regarding the federal income taxation of
shareholders of Meditrust Corporation, a Delaware corporation (the "REIT"), in
connection with the Joint Registration Statement on Form S-3 of the REIT and
Meditrust Operating Company, a Delaware corporation (together with the REIT, the
"Companies") with respect to the Companies' registration of 650,000 shares of
paired common stock of the Companies to be offered from time to time by certain
selling stockholders as set forth therein (the "Registration Statement"). The
facts, as we understand them, and upon which we rely in rendering the opinion
expressed herein, are set forth in the Registration Statement.
Based on such facts, we are of the opinion that the statements
contained in the Registration Statement under the caption "Federal Income Tax
Considerations," insofar as such statements constitute statements of federal
income tax law, are correct in all material respects. No opinion is expressed as
to any factual matter or as to any matter not set forth therein. Our opinion is
based on our interpretation of the statutes, regulations, decisions and
published administrative interpretations in effect on the date hereof, and we
can offer no assurance that such statutes, regulations, decisions and published
administrative interpretations will not be amended, revoked or modified in a
manner that would affect our opinion set forth herein. Further, any variation in
the facts from those set forth in the Registration Statement may affect the
conclusion stated herein.
We understand that this opinion letter is to be used in connection with
the Registration Statement, as finally amended, and hereby consent to the filing
of this opinion letter with and as a part of the Registration Statement as so
amended, and to the reference to our firm in the Prospectus under the heading
"Legal Matters." It is understood that this opinion letter is to
<PAGE>
be used in connection with the offer and sale of the shares of paired common
stock only while the Registration Statement is effective as so amended and as it
may be amended from time to time as contemplated by Section 10(a)(3) of the
Securities Act.
Very truly yours,
Nutter, McClennen & Fish, LLP
KPF/NCH/pm
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Joint Registration
Statement on Form S-3 dated November 25, 1997 of Meditrust Corporation, formerly
known as Santa Anita Realty Enterprises, Inc. and Meditrust Operating Company,
formerly known as Santa Anita Operating Company, of our reports dated January
16, 1997 on our audits of the consolidated financial statements and financial
statement schedules of Meditrust as of December 31, 1996 and 1995, and for the
years ended December 31, 1996, 1995 and 1994.
Coopers & Lybrand, L.L.P.
Boston, Massachusetts
November 25, 1997
EXHIBIT 23.3
CONSENT OF ERNST & YOUNG LLP
We consent to the incorporation by reference of our report dated April
14, 1997 accompanying the financial statement and schedules of:
(a) Santa Anita Companies
(b) Santa Anita Realty Enterprises, Inc., and
(c) Santa Anita Operating Company and Subsidiaries
appearing in the above-listed entities' Annual Report on Form 10-K, as amended
by amendments on Form 10-K/A, for the year ended December 31, 1996 in the joint
Registration Statement on Form S-3 and related Prospectus filed by Meditrust
Corporation (formerly know as "Santa Anita Realty Enterprises, Inc.") and
Meditrust Operating Company (formerly known as "Santa Anita Operating Company").
Ernst & Young LLP
Los Angeles, California
November 24, 1997
EXHIBIT 23.4
CONSENT OF INDEPENDENT AUDITORS
The Managing General Partner
H-T Associates
We consent to incorporation by reference in the Joint Registration Statement on
Form S-3 and related prospectus of Meditrust Corporation and Meditrust Operating
Company of our report dated February 10, 1997, relating to the consolidated
balance sheets of H-T Associates and subsidiary (the "Partnership") as of
December 31, 1996 and 1995, and the related consolidated statements of
operations, partners' capital (deficit) and cash flows for each of the years in
the three-year period ended December 31, 1996, which report appears in the
December 31, 1996 Joint Annual Report on Form 10-K, as amended by amendments on
Form 10-K/A, of Santa Anita Realty Enterprises, Inc. and Santa Anita Operating
Company and to the reference to our firm under the heading "Experts" in the
Joint Registration Statement and related prospectus. Our report dated February
10, 1997, contains an explanatory paragraph that states that the Partnership's
primary subsidiary is in technical default on its notes payable at December 31,
1996. As such, those notes may be callable at the lender's discretion. This
technical default raises substantial doubt about the Partnership's ability to
continue as a going concern. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
KPMG Peat Marwick LLP
San Diego, California
November 21, 1997
EXHIBIT 23.5
CONSENT OF INDEPENDENT AUDITORS
The General Partner
Anita Associates
We consent to incorporation by reference in the Joint Registration Statement on
Form S-3 and related prospectus of Meditrust Corporation and Meditrust Operating
Company of our report dated February 7, 1997, relating to the balance sheets of
Anita Associates as of December 31, 1996 and 1995, and the related statements of
income, partners' deficit and cash flows for each of the years in the three-year
period ended December 31, 1996, which report appears in the December 31, 1996
Joint Annual Report on Form 10-K, as amended by amendments on Form 10-K/A, of
Santa Anita Realty Enterprises, Inc. and Santa Anita Operating Company, and to
the reference to our firm under the heading "Experts" in the Joint Registration
Statement and related prospectus.
KPMG Peat Marwick LLP
San Diego, California
November 21, 1997
