MEDITRUST OPERATING CO, 424B3, 1998-06-24

MEDITRUST OPERATING CO
424B3, 1998-06-24
REAL ESTATE INVESTMENT TRUSTS

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PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MAY 28, 1998)

8,177,300 Paired Shares

The Meditrust Companies

COMMON STOCK

---------------------

This Prospectus Supplement covers the offering for resale of 8,177,300 paired
shares, $.10 par value (the "Shares"), of Meditrust Corporation ("Meditrust")
and Meditrust Operating Company ("Operating Company", and together with
Meditrust, "The Meditrust Companies") by certain selling stockholders named
herein (the "Selling Stockholders"). The Selling Stockholders acquired the
Shares in connection with the merger of Cobblestone Holdings, Inc. with and into
Meditrust (the "Merger"), which closed on May 29, 1998.

The Meditrust Companies comprise two companies, Meditrust and Operating Company,
each incorporated under the laws of Delaware. Meditrust qualifies as a real
estate investment trust under the Internal Revenue Code of 1986, as amended. The
Meditrust Companies have an organizational structure commonly referred to as a
"paired share" structure. Each paired share of capital stock of The Meditrust
Companies comprises one share of common stock of Meditrust and one share of
common stock of Operating Company, and is herein referred to as a "Paired
Share". The Paired Shares are traded on the New York Stock Exchange (the "NYSE")
under the symbol "MT". On June 22, 1998 the closing sale price of the Paired
Shares on the NYSE was $26.8125.

The Shares may be offered and sold by the Selling Stockholders or their
transferees from time to time in transactions on the NYSE, in
privately-negotiated transactions or in 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 Shares may be sold directly 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). See "Selling Stockholders" and "Plan of Distribution".

The Meditrust Companies will not receive any of the proceeds from the sale of
the Shares.

---------------------
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 PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

---------------------

The date of this Prospectus Supplement is June 24, 1998.

S-1

<PAGE>

SELLING STOCKHOLDERS

The following table sets forth the names of the Selling Stockholders, the
number of Paired Shares owned beneficially by each of them as of the closing of
the Merger and the number of Shares that may be offered by each of them pursuant
to this Prospectus Supplement.

<TABLE>
<CAPTION>
Shares
Beneficially Owned
Shares Beneficially If All Shares and
Owned Prior to Sold
Offering and Being ------------------
Selling Stockholders Registered for Sale Number Percent
-------------------- ------------------- -------- --------
<S> <C> <C> <C>
Brentwood Golf Partners, L.P. (1) .............................. 5,317,492 -- --
The Northwestern Mutual Life Insurance Company ................. 574,033 -- --
James A. Husband, Jr. (2) ...................................... 541,092 -- --
Wilmington Interstate Corporation .............................. 282,466 -- --
Cede & Co. ..................................................... 254,044 -- --
BankAmerica Investment Corporation ............................. 160,765 -- --
FSC Corp. ...................................................... 111,551 -- --
Steven L. Holmes ............................................... 73,909 -- --
Pacific Enterprises Golf Partners, L.P. ........................ 85,155 -- --
Henry L. Hillman, Elsie Hilliard Hillman and C.G.
Grefenstette, Trustees of the Henry L. Hillman Trust U/A/T
dated November 18, 1985 ....................................... 73,796 -- --
Venhill Limited Partnership .................................... 73,796 -- --
Joseph L. Champ ................................................ 70,298 -- --
SSB Investments, Inc. .......................................... 55,803 -- --
Gary Dee (3) ................................................... 49,211 -- --
John M. Sullivan (4) ........................................... 42,216 -- --
Norman Goodmanson (5) .......................................... 36,415 -- --
Oak Leaf Partners .............................................. 32,670 -- --
ING Barings (U.S.) Capital Corp. ............................... 28,422 -- --
Andrew Crosson (6) ............................................. 26,013 -- --
C.G. Grefenstette and Thomas G. Bigley, Trustees U/A/T dated
8/28/68 for Henry Lea Hillman, Jr. ............................ 24,629 -- --
C.G. Grefenstette and Thomas G. Bigley, Trustees U/A/T dated
8/28/68 for William Talbott Hillman ........................... 24,629 -- --
C.G. Grefenstette and Thomas G. Bigley, Trustees U/A/T dated
8/28/68 for Juliet Lea Hillman ................................ 24,583 -- --
C.G. Grefenstette and Thomas G. Bigley, Trustees U/A/T dated
8/28/68 for Audrey Hilliard Hillman ........................... 24,583 -- --
Paul Lewis Davies III(7) ....................................... 23,763 -- --
Havens Partners, L.P ........................................... 23,550 -- --
Mariner Group, LDC ............................................. 22,540 -- --
Havens Partners, L.P. .......................................... 23,550 -- --
Mariner Group, LDC ............................................. 22,540 -- --
Robert S. West, Jr. (8) ........................................ 18,747 -- --
Martin R. Reid, IRA R/O Oppenheimer & Co., Inc., as
custodian (9) ................................................. 16,421 -- --
James T. Bergmark .............................................. 11,717 -- --
Martin R. Reid (9) ............................................. 9,373 -- --
Balboa Park Management Co., Inc. ............................... 7,469 -- --
George M. Meaney ............................................... 6,590 -- --
Kenneth D. Brody ............................................... 4,006 -- --
---------
Total ...................................................... 8,177,300
</TABLE>

- ------------

(1) Brentwood Golf Partners, L.P. has distributed a portion of the Shares
received by it in connection with the Merger to its general and limited
partners (the "Brentwood Partners"). See "--The Brentwood Partners".
(2) Chief Executive Officer of The Cobblestone Companies, Inc., a wholly owned
subsidiary of Operating Company; former President, Chief Executive Officer
and Director of Meditrust Golf Group, Inc., a wholly owned subsidiary of
Meditrust.
(3) Officer of The Cobblestone Companies, Inc.; former Officer of Meditrust
Golf Group, Inc.
(4) Former Director of Meditrust Golf Group, Inc.
(5) Former Officer of Meditrust Golf Group, Inc.
(6) Officer of The Cobblestone Companies, Inc.; former Officer of Meditrust
Golf Group, Inc.
(7) Former Director of Meditrust Golf Group, Inc.
(8) Former Officer of Meditrust Golf Group, Inc.
(9) Former Director of Meditrust Golf Group, Inc.

S-2
<PAGE>

The Brentwood Partners

The following table sets forth the names of the Brentwood Partners, the
number of Paired Shares owned beneficially by each of them following the
distribution by Brentwood Golf Partners, L.P. and the number of Shares that may
be offered by them pursuant to this Prospectus Supplement.

<TABLE>
<CAPTION>
Shares Beneficially
Shares Beneficially Owned
Owned Prior to If All Shares are Sold
Offering and Being ----------------------
Selling Stockholders Registered for Sale Number Percent
-------------------- ------------------- -------- --------
<S> <C> <C> <C>
Brentwood Buyout Partners, L.P. (1) ................. 73,077 -- --
Archimedes Partners, L.P. ........................... 30,324 -- --
Candice Appleton Family Trust ....................... 2,592 -- --
APT Holdings Corporation ............................ 51,835 -- --
BankAmerica Capital Corporation ..................... 51,835 -- --
James R. Barker ..................................... 1,296 -- --
Ann B. Barker ....................................... 1,296 -- --
Margaret W. Barker Clark ............................ 1,296 -- --
W.B. Barker ......................................... 1,296 -- --
James J. Barnett .................................... 259 -- --
The Barton Family Trust ............................. 2,073 -- --
Alan J. Barton Retirement Plan ...................... 1,037 -- --
Harold Beral ........................................ 1,037 -- --
Brentwood/Equitable L.P., I (1) ..................... 93,700 -- --
Brentwood/Equitable L.P., II (1) .................... 11,016 -- --
Citicorp North America, Inc. ........................ 103,669 -- --
Colgate University .................................. 2,125 -- --
Sentry Insurance a Mutual Company ................... 31,101 -- --
Endowment Equity Partners I, L.P. ................... 72,568 -- --
Second Associated Western Investors Pte. Ltd. ....... 51,835 -- --
Forest Foundation ................................... 5,183 -- --
Wilmington Interstate Corporation ................... 34,211 -- --
Juliet Lea Hillman Trust ............................ 1,814 -- --
Henry L. Hillman Trust .............................. 10,367 -- --
Henry Lea Hillman, Jr. Trust ........................ 1,814 -- --
Audrey Hilliard Hillman Trust ....................... 1,814 -- --
William Talbott Hillman Trust ....................... 1,814 -- --
Dwight E. Lee ....................................... 581 -- --
T. David Lipton, M.D. Profit Sharing Plan ........... 1,037 -- --
George M. Meaney .................................... 311 -- --
Merrill Lynch L.P. Holdings, Inc. ................... 51,835 -- --
New York Life Insurance Company ..................... 103,669 -- --
The Northwestern Mutual Life Insurance Company ...... 103,669 -- --
Ontario Municipal Employees' Retirement Board ....... 67,386 -- --
Pacific Mutual Life Insurance ....................... 10,367 -- --
Paul, Hastings, Janofsky & Walker, L.L.P. ........... 20,734 -- --
Pennsylvania State Employees' Retirement System ..... 103,669 -- --
Phemus Corporation (Harvard) ........................ 51,835 -- --
Rush-Presbyterian-St. Luke's Medical Center
Endowment .......................................... 25,917 -- --
Rush-Presbyterian-St. Luke's Medical Center
Pension ............................................ 25,917 -- --
Sequoia Foundation .................................. 5,183 -- --
William J. & Leslie Shaw ............................ 518 -- --
</TABLE>

S-3
<PAGE>

- ------------

(1) Brentwood Buyout Partners, L.P., Brentwood/Equitable L.P., I and
Brentwood/Equitable L.P., II have distributed a portion of the shares
received by them from Brentwood Golf Partners, L.P. to their general and
limited partners (the "Buyout Partners"). See "The Buyout Partners".

S-4
<PAGE>

The Buyout Partners

The following table sets forth the names of the Buyout Partners, the number
of Paired Shares owned beneficially by each of them following the distribution
by Brentwood Buyout Partners, L.P., Brentwood/Equitable L.P., I and
Brentwood/Equitable L.P., II and the number of Shares that may be offered
by them pursuant to this Prospectus Supplement.

- ------------

(1) Former Director of Meditrust Golf Group, Inc.

(2) Former Officer and Director of Meditrust Golf Group, Inc.

S-5
<PAGE>

PLAN OF DISTRIBUTION

The Meditrust Companies have been advised that the Selling Stockholders or
their transferees may sell the Shares from time to time in one or more
transactions at fixed prices, at prevailing market prices at the time of sale,
at varying prices determined at the time of sale or at negotiated prices. The
sale of the Shares may be effected in transactions (which may involve cross or
block trades) (i) on the NYSE or any other national securities exchange or
quotation service on which the Shares may be listed or quoted at the time of
sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than
on such exchanges or in the over-the-counter market, (iv) through the writing of
options or (v) by any other legally available means. The Shares may be sold
directly 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
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).

Certain persons who sell the Shares covered by this Prospectus Supplement,
and any broker or dealer to or through whom any such person shall sell such
securities, may be deemed to be underwriters within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
sale of such securities, 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 Meditrust 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 has been passed
upon by Cravath, Swaine & Moore, New York, New York. In addition, Nutter,
McClennen & Fish, LLP, Boston, Massachusetts, has passed on certain Federal
income tax matters relating to the Meditrust 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. Paul R. Eklund, also a
partner in the law firm Nutter, McClennen & Fish, LLP, currently serves as
Assistant Secretary of Meditrust. Nutter, McClennen & Fish, LLP, serves as
counsel to The Meditrust Companies, and has rendered a legal opinion with
respect to certain Federal income tax matters included as a part of the
Registration Statement on Form S-3 filed under the Securities Act of 1933, as
amended, in connection herewith.

S-6
<PAGE>

PROSPECTUS

8,200,000* Paired Shares

The Meditrust Companies

Common Stock
---------------

All the Paired Shares, $.10 par value per share, of The Meditrust Companies
offered hereby (the "Shares") are being offered by certain selling stockholders
named herein (the "Selling Stockholders"). The Meditrust Companies ("The
Meditrust Companies") are comprised of two companies, Meditrust Corporation
("Meditrust" or the "Corporation") and Meditrust Operating Company ("Operating
Company"), each incorporated under the laws of Delaware. Meditrust qualifies as
a real estate investment trust under the Internal Revenue Code of 1986, as
amended (the "Code"). The Meditrust Companies have an organizational structure
commonly referred to as a "paired share" structure. The shares of the capital
stock of The Meditrust Companies are sold and trade together as single units,
which are referred to as "paired shares." The paired shares of The Meditrust
Companies are comprised of common stock of Meditrust ("Meditrust Common Stock")
and common stock of the Operating Company ("Operating Common Stock") and are
herein referred to as "Paired Shares." The Paired Shares are traded on the New
York Stock Exchange (the "NYSE") under the symbol "MT". On May 22, 1998 the
closing sale price of the Paired Shares on the NYSE was $28.1875.

See "Risk Factors" beginning on page 4 for a discussion of certain matters
that should be considered by prospective investors.

The Shares may be offered and sold by the Selling Stockholders or their
transferees from time to time after the closing of the Cobblestone merger in
transactions on 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 Shares may be sold directly 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). See "Selling Stockholders" and
"Plan of Distribution."

The Meditrust Companies will not receive any of the proceeds from the sale
of the Shares. The Meditrust Companies have agreed to bear certain expenses in
connection with the registration of the Shares being offered and sold by the
Selling Stockholders, which The Meditrust Companies estimate will be
approximately $241,447, and have agreed to indemnify the Selling Stockholders
against certain liabilities.

---------------

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 PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

---------------

* This Prospectus covers the offering for resale of an indeterminate number
of Paired Shares to be issued to the Selling Stockholders upon the consummation
of the merger of Cobblestone Holdings, Inc. ("Cobblestone") with and into
Meditrust, with Meditrust being the surviving corporation. The Cobblestone
merger has been approved by the requisite holders of the common and preferred
stock of Cobblestone, and is expected by The Meditrust Companies to close in the
second quarter of 1998. The number of Paired Shares issuable in connection with
the Cobblestone merger and to be offered for resale hereby is subject to
adjustment as described in the Cobblestone merger agreement based on a number of
factors, including the Average Closing Price (as defined below under "The
Meditrust Company--Recent Developments--Cobblestone Merger") of the Paired
Shares on the NYSE prior to the closing date of the Cobblestone merger. The
actual number of Shares issued to the Selling Stockholders upon consummation of
the Cobblestone merger shall be specified in a prospectus supplement to this
Prospectus. See "The Meditrust Companies--Recent Developments--Cobblestone
Merger."

---------------

The date of this Prospectus is May 28, 1998.
<PAGE>

AVAILABLE INFORMATION

The Meditrust 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 Meditrust 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 Meditrust 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 Meditrust
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 Meditrust 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.

2
<PAGE>

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents are incorporated herein by reference:

Meditrust and the Operating Company Joint Filings

1. Joint Annual Reports on Form 10-K and Form 10-K/A for the Fiscal year
ended December 31, 1997.

2. Joint Quarterly Report on Form 10-Q for the Quarter ended March 31, 1998;

3. Joint Current Report on Form 8-K, event date January 3, 1998;

4. Joint Current Report on Form 8-K, event date January 3, 1998, as amended
by Form 8-K/A filed May 21, 1998;

5. Joint Current Report on Form 8-K, event date January 4, 1998;

6. Joint Current Report on Form 8-K, event date January 11, 1998;

7. Joint Current Report on Form 8-K, event date January 11, 1998;

8. Joint Current Report on Form 8-K, event date February 24, 1998;

9. Joint Current Report on Form 8-K, event date February 26, 1998, as
amended by Form 8-K/A filed April 29, 1998;

10. Joint Current Report on Form 8-K, event date March 16, 1998;

11. Joint Current Report on Form 8-K, event date March 31, 1998;

12. Joint Current Report on Form 8-K, event date May 13, 1998; and

13. Joint Current Report on Form 8-K, event date May 20, 1998.

Santa Anita Realty Enterprises, Inc. and Santa Anita Operating Company

1. The description of the common stock of Santa Anita Realty Enterprises,
Inc. ("Santa Anita Realty") and Santa Anita Operating Company ("Santa Anita
Operating" and, together with Santa Anita Realty, "The Santa Anita Companies"),
including descriptions of the certificates of incorporation and by-laws of The
Santa Anita Companies and descriptions of applicable provisions of the Delaware
General Corporation Law (the "DGCL"), which are contained or incorporated by
reference in the Joint Registration Statement on Form S-4 of the Santa Anita
Companies (Nos. 333-34831 and 333-34831-01), including any amendments thereto
(the "Santa Anita S-4"), under the headings "Description of Capital Stock of The
Santa Anita Companies" and "The Mergers--Material Differences in the Rights of
Shareholders of The Santa Anita Companies and Meditrust and MAC." The Santa
Anita Companies were the surviving corporations in the Santa Anita Mergers (as
defined below). Descriptions of their capital stock, certificates of
incorporation and by-laws and of the applicable provisions of the DGCL, which
are incorporated herein from the Santa Anita S-4, therefore describe such items
with respect to The Meditrust Companies in this Prospectus.

All other documents filed by The Meditrust 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 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. To
the extent that any proxy statement is incorporated by reference herein, such
incorporation shall not include any information contained in such proxy
statement which is not, pursuant to the Commission's rules, deemed to be "filed"
with the Commission or subject to the liabilities of Section 18 of the Exchange
Act.

The Meditrust 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
Meditrust, 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
Operating Company, to Michael J. Bohnen, Secretary, Meditrust Operating Company,
197 First Avenue, Suite 100, Needham Heights, Massachusetts 02194, telephone
(781) 453-8062.

3
<PAGE>

RISK FACTORS

In addition to the other information contained or incorporated by reference
in this Prospectus, prospective investors in the Paired Shares should carefully
consider the following risk factors.

REIT Tax Risks; Paired Share REIT Tax Risks

Pending Legislation Regarding Paired Share REITS. A significant component
of The Meditrust Companies' strategy is to grow through acquisitions, and they
believe that the current tax treatment of their paired share structure provides
them with certain advantages in making acquisitions. If the legislation
described below is enacted, then the income and activities of Operating Company
with respect to any property acquired by The Meditrust Companies after March 26,
1998, for which there was no binding written agreement, public announcement or
SEC filing on or before March 26, 1998, will be attributed to Meditrust for
purposes of determining whether Meditrust qualifies as a real estate investment
trust (a "REIT") under the Code. This proposed legislation would effectively
limit the advantages of The Meditrust Companies' paired share structure to their
existing properties and could make it more difficult for them to make
acquisitions in the future.

The tax rules relating to paired share REITs are the subject of intense
scrutiny by the Treasury Department and Congress. On February 2, 1998, the
Treasury Department released an explanation of the revenue proposals included in
the Clinton Administration's fiscal 1999 budget (the "Tax Proposals"). The Tax
Proposals, among other things, include a freeze on the grandfathered status of
paired share REITs such as The Meditrust Companies. Under this proposal,
Meditrust and Operating Company would be treated as one entity with respect to
properties acquired on or after the date of the first Congressional committee
action with respect to such proposal and with respect to activities or services
relating to such properties that are undertaken or performed by one of the
paired entities on or after such date. The Tax Proposals also would prohibit
REITs from holding stock possessing more than 10% (and less than 100%) of the
vote or value of all classes of stock of any corporation and impose a
potentially prohibitive tax on REITs that acquire regular "C" corporations in
reorganization transactions. Restructuring the operations of Meditrust and
Operating Company to comply with the rules contemplated by the Tax Proposals
could cause The Meditrust Companies to incur substantial tax liabilities,
"unpair" the stock of The Meditrust Companies or otherwise adversely affect The
Meditrust Companies and could prevent Meditrust from growing as originally
intended at the time of the merger with Santa Anita Realty.

On March 26, 1998, Representative William Archer, Chairman of the House
Ways and Means Committee, and Senator William V. Roth, Jr., Chairman of the
Senate Finance Committee, introduced legislation similar to the Tax Proposals to
limit the "grandfathering" rule applicable to paired share REITs. See
"--Dependence on Qualification as a REIT." Under the proposed legislation, the
anti-pairing rules provided in the Code would apply to real property interests
acquired or substantially improved after March 26, 1998 by The Meditrust
Companies, or a subsidiary or partnership in which a ten percent or greater
interest is owned by The Meditrust Companies (collectively, the "REIT Group"),
unless (1) the real property interests are acquired pursuant to a written
agreement that was binding on March 26, 1998 and at all times thereafter or (2)
the acquisition of such real property interests was described in a public
announcement or in a filing with the SEC on or before March 26, 1998. On May 7,
1998, the Senate unanimously passed The Internal Revenue Service Restructuring
and Reform Bill of 1998 (the "Bill"), which contains the anti-pairing
legislation described above. Moreover, the Bill provides that any property
acquired after March 26, 1998 by any company that is acquired by a paired share
REIT, other than property acquired pursuant to a written agreement that was
binding on March 26, 1998, would be subject to the anti-pairing rules.

Under this legislation as currently proposed, the properties held on March
26, 1998, by La Quinta Inns, Inc. ("La Quinta") and Cobblestone, which would be
acquired pursuant to Meditrust's proposed mergers with such companies, would not
be subject to these anti-pairing rules. However, any property acquired by either
La Quinta or Cobblestone after March 26, 1998, other than property acquired
pursuant to a written agreement that was binding on March 26, 1998, would be
subject to the anti-pairing rules. Moreover, we cannot assure you that this
legislation will be adopted in its current form or that the properties to be
acquired from La Quinta and Cobblestone or other properties of The Meditrust
Companies will not become subject to the anti-pairing rules of the Code in the
future. In such a case, Operating Company (including corporate subsidiaries of
Meditrust that are controlled by Operating Company) may not be able to operate
the hotels and golf courses to be acquired by Meditrust in such mergers in the
manner currently contemplated without disqualifying Meditrust as a REIT. Such a
limitation would have a material adverse effect on The Meditrust Companies,
including their results of operation, financial condition and prospects.

4
<PAGE>

In addition, the proposed legislation also provides that a property held by
a paired share REIT but not subject to the anti-pairing rules would become
subject to such rules in the event of either (1) an improvement placed in
service after December 31, 1999 that changes the use of the property and the
cost of which is greater than 200 percent of (A) the undepreciated cost of the
property (prior to the improvement) or (B) in the case of property acquired
where there is a substituted basis (e.g., the properties to be acquired from La
Quinta and Cobblestone), the fair market value of the property on the date it
was acquired by The Meditrust Companies or (2) an addition or improvement that
expands beyond the boundaries of the land included in such property. The
proposed legislation contains an exception for improvements placed in service
before January 1, 2004 pursuant to a binding contract in effect on December 31,
1999 and at all times thereafter. This proposed restriction on property
improvements would apply to the properties to be acquired from La Quinta and
Cobblestone, as well as all other properties owned by The Meditrust Companies,
and would limit the ability of The Meditrust Companies to improve or change the
use of those properties after December 31, 1999.

Other legislation (including other legislation that is currently pending
before Congress), as well as regulations, administrative interpretations or
court decisions, also could change the tax law with respect to Meditrust's
qualification as a REIT and the federal income tax consequence of such
qualification. The adoption of any such legislation, regulations or
administrative interpretations or court decisions could have a material adverse
effect on the results of operations, financial condition and prospects of The
Meditrust Companies and could prevent Meditrust from growing as originally
intended at the time of the merger with Santa Anita Realty.

Dependence on Qualification as a REIT. Meditrust believes that it operates
so as to qualify as a REIT for federal income tax purposes. However, there is no
assurance that Meditrust has satisfied the requirements for REIT qualification
in the past or will qualify as a REIT in the future. Qualification as a REIT
involves the application of highly technical and complex provisions of the Code,
for which there are only limited judicial or administrative interpretations. The
complexity of these provisions is greater in the case of a paired share REIT
such as Meditrust. Qualification as a REIT also involves the determination of
various factual matters and circumstances not entirely within Meditrust's
control. In addition, Meditrust's ability to qualify as a REIT is dependent upon
its continued exemption from the anti-pairing rules of Section 269B(a)(3) of the
Code, which, if they were to apply, would prevent Meditrust from qualifying as a
REIT. The "grandfathering" rules governing Section 269B generally provide,
however, that Section 269B(a)(3) does not apply to a paired share REIT if the
REIT and its paired operating company were paired on June 30, 1983. On June 30,
1983, Meditrust (which was then known as Santa Anita Realty Enterprises, Inc.)
was paired with the Operating Company (which was then known as Santa Anita
Operating Company). There are, however, no judicial or administrative
authorities interpreting this "grandfathering" rule. Moreover, if for any reason
Meditrust failed to qualify as a REIT in 1983, the benefit of the
"grandfathering" rule would not be available to Meditrust, in which case
Meditrust would not qualify as a REIT for any taxable year from and after 1983.
Failure of Meditrust to qualify as a REIT would have a material adverse effect
on The Meditrust Companies and their ability to make distributions to their
shareholders and to pay amounts due on their indebtedness. See "Certain Federal
Income Tax Considerations--REIT Qualification of Meditrust."

On November 5, 1997, Meditrust, a Massachusetts business trust and the
predecessor to Meditrust Corporation (hereinafter called "Meditrust's
Predecessor"), merged (the "Realty Merger") with Santa Anita Realty, with Santa
Anita Realty as the surviving corporation, whereupon Santa Anita Realty changed
its name to Meditrust Corporation. At the same time, Meditrust Acquisition
Company ("MAC"), a newly organized Massachusetts business trust, merged (the
"SAOC Merger" and together with the Realty Merger, the "Santa Anita Mergers")
with Santa Anita Operating, with Santa Anita Operating as the surviving
corporation, whereupon Santa Anita Operating changed its name to Meditrust
Operating Company. Qualification of Meditrust as a REIT in the future also
generally depends on the REIT qualification of Meditrust for prior periods and
the REIT qualification of Meditrust's Predecessor for periods prior to November
5, 1997. Accordingly, failure of Meditrust's Predecessor to qualify as a REIT
for periods prior to November 5, 1997 could have a material adverse effect on
The Meditrust Companies and their ability to make distributions to shareholders
and pay amounts due on their indebtedness. See "Certain Federal Income Tax
Considerations--REIT Qualification of Meditrust."

Meditrust believes that it has operated (and that prior to the Santa Anita
Mergers, Meditrust's Predecessor operated), and will operate following the Santa
Anita Mergers, in a manner that permits Meditrust to qualify as a REIT under the
Code for each taxable year since its formation. Nutter, McClennen & Fish, LLP,
special tax counsel to Meditrust, has rendered an opinion that (i) Meditrust's
Predecessor was organized and operated in conformity

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with the requirements for qualification and taxation as a REIT under the Code
since its taxable year ended December 31, 1989 through its final taxable year,
and (ii) Meditrust has been organized and operated in conformity with the
requirements for qualification as a REIT under the Code since its taxable year
ended December 31, 1992 through its taxable year ended December 31, 1997, and
Meditrust's form of organization and proposed method of operation will enable it
to continue to meet the requirements for qualification and taxation as a REIT
under the Code. Counsel is unable, however, to render an opinion regarding
Meditrust's qualification as a REIT in its taxable years ended December 31,
1989, 1990 and 1991 because it did not conduct the due diligence necessary to
render an opinion for such years. If it is subsequently determined that
Meditrust did not qualify as a REIT in those years, Meditrust potentially could
incur corporate tax with respect to a year that is still open to adjustment by
the Internal Revenue Service. However, Meditrust believes that any such tax
would not be material to its shareholders. See "Certain Federal Income Tax
Considerations--REIT Qualification of Meditrust."

If Meditrust were to fail to qualify as a REIT, it would be subject to
federal income tax (including any applicable alternative minimum tax) on its
taxable income at corporate rates. In addition, unless entitled to relief under
certain statutory provisions and subject to the discussion above regarding the
impact if Meditrust failed to qualify as a REIT in 1983, Meditrust also would be
disqualified from re-electing REIT status for the four taxable years following
the year during which qualification is lost. Failure to qualify as a REIT would
result in additional tax liability to Meditrust for the year or years involved.
In addition, Meditrust would no longer be required by the Code to make
distributions to its shareholders. To the extent that distributions to
shareholders would have been made in anticipation of Meditrust's qualifying as a
REIT, Meditrust might be required to borrow funds or to liquidate certain of its
investments to pay the applicable tax. See "Certain Federal Income Tax
Considerations--REIT Qualification of Meditrust."

The failure to qualify as a REIT would also constitute a default under
certain debt obligations of Meditrust, which would generally allow the holders
thereof to demand the immediate repayment of such indebtedness, which could have
a material adverse effect on The Meditrust Companies and their ability to make
distributions to shareholders and to pay amounts due on their indebtedness.

Adverse Effects of REIT Minimum Distribution Requirements. In order to
qualify as a REIT, Meditrust is generally required each year to distribute to
its shareholders at least 95% of its taxable income (excluding any net capital
gain). In addition, if Meditrust were to dispose of assets acquired in certain
acquisitions during the ten-year period following the acquisition, Meditrust
would be required to distribute at least 95% of the amount of any "built-in
gain" attributable to such assets that Meditrust recognizes in the disposition,
less the amount of any tax paid with respect to such recognized built-in gain.
See "Certain Federal Income Tax Considerations--REIT Qualification of
Meditrust." Meditrust generally is subject to a 4% nondeductible excise tax on
the amount, if any, by which certain distributions paid by it with respect to
any calendar year are less than the sum of (i) 85% of its ordinary income for
that year, (ii) 95% of its capital gain net income for that year, and (iii) 100%
of its undistributed income from prior years.

Meditrust intends to make distributions to its shareholders to comply with
the 95% distribution requirement and to avoid the nondeductible excise tax.
Differences in timing between the recognition of taxable income and the receipt
of cash available for distribution and the seasonality of the businesses it owns
or may acquire could require Meditrust to borrow funds on a short-term basis to
meet the 95% distribution requirement and to avoid the nondeductible excise tax.

Distributions to shareholders by The Meditrust Companies are determined by
their respective Boards of Directors and depend on a number of factors,
including, the amount of cash available for distribution, financial condition,
results of operations, any decision by either Board of Directors to reinvest
funds rather than to distribute such funds, capital expenditures, the annual
distribution requirements under the REIT provisions of the Code (in the case of
Meditrust) and such other factors as either Board of Directors deems relevant.
For federal income tax purposes, distributions paid to shareholders may consist
of ordinary income, capital gains (in the case of Meditrust), return of capital,
or a combination thereof. The Meditrust Companies will provide shareholders with
annual statements as to the taxability of distributions.

Requirement to Distribute Accumulated Earnings and Profits. To maintain its
qualification as a REIT in the event its merger with La Quinta is consummated,
Meditrust will be required to distribute any earnings and profits inherited from
La Quinta in the La Quinta merger (as determined for federal income tax
purposes). Following the

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merger, Meditrust intends to make a distribution of earnings and profits in the
amount determined by Meditrust to be necessary for federal income tax purposes.

It is a condition to the obligation of The Meditrust Companies to
consummate the proposed merger with La Quinta that, at the closing date of the
proposed merger, La Quinta and Meditrust shall have obtained a report prepared
by KPMG Peat Marwick LLP ("KPMG") of the accumulated and current earnings and
profits of La Quinta (as determined for federal income tax purposes) as of the
most recent date through which earnings and profits are ascertainable, as well
as a reasonable estimate of any earnings and profits from such most recent date
through the closing date of the merger, and Coopers & Lybrand LLP shall have
reviewed and approved in the exercise of its reasonable judgment the report and
workpapers of KPMG. La Quinta has provided a report of the earnings and profits
calculation through December 31, 1996 from KPMG.

It is a condition to the obligation of The Meditrust Companies to
consummate the proposed merger with Cobblestone that, as of the closing date of
the proposed merger, Cobblestone and The Meditrust Companies shall have obtained
a letter from the independent accountants of Cobblestone, reasonably
satisfactory to The Meditrust Companies, to the effect that Cobblestone had no
current or accumulated earnings and profits (as determined for federal income
tax purposes) as of September 30, 1997, and a certification from Cobblestone's
Chief Financial Officer, reasonably satisfactory to The Meditrust Companies, to
the effect that as of the closing date of the proposed merger, Cobblestone has
no such current or accumulated earnings and profits.

If the Internal Revenue Service ("IRS") were to determine that La Quinta's
actual current or accumulated earnings and profits exceeded the amount
distributed or deemed distributed by Meditrust following the proposed merger
(due to miscalculation, insufficient funds or any other reason), or that
Cobblestone in fact had current or accumulated earnings and profits, Meditrust
would be disqualified as a REIT. Certain technical provisions of the Taxpayer
Relief Act of 1997 facilitate the distribution of inherited earnings and
profits, but do not change the basic requirement that inherited earnings and
profits must be distributed.

Risks Associated with Rapid Growth of The Meditrust Companies; Risks of Growth
Strategy

The Meditrust Companies currently are experiencing a period of rapid growth
through acquisitions. The Meditrust Companies recently have completed the Santa
Anita Mergers, acquired (the "IRI Acquisition") five golf courses (the "IRI Golf
Courses") from IRI Golf Group ("IRI"), and entered into merger agreements with
La Quinta and Cobblestone. See "The Meditrust Companies--Recent Developments."
Failure to efficiently manage acquired assets, or the failure of The Meditrust
Companies to successfully integrate Santa Anita's, La Quinta's, IRI's or
Cobblestone's operations with existing operations and the operations of other
acquired businesses, could have a material adverse effect on The Meditrust
Companies and their ability to make distributions to shareholders and to pay
amounts due on their indebtedness. The success of any completed acquisition will
depend in large measure on The Meditrust Companies' ability to integrate the
acquired properties within The Meditrust Companies' existing portfolio, to
integrate the accounting systems, management information systems, personnel and
other operations acquired with those of The Meditrust Companies, and to improve
the operating results of the acquired properties and businesses. The process of
integrating acquired properties, operations and personnel and in particular,
geographically diverse properties and properties which, like the Santa Anita, La
Quinta, IRI and Cobblestone properties, are outside of The Meditrust Companies'
traditional expertise in health care related properties, with The Meditrust
Companies' existing properties may involve unforeseen difficulties and may
require a disproportionate amount of The Meditrust Companies' financial and
other resources, including management time, which could adversely impact The
Meditrust Companies.

As noted above, there can be no assurance that proposed or pending
acquisitions will be consummated or that acquired properties or businesses will
perform in accordance with expectations. In that regard, see "--Cautionary
Statements Concerning Forward-Looking Statements" below. In addition, the
proposed La Quinta and Cobblestone acquisitions will be financed largely through
the issuance of Paired Shares, and The Meditrust Companies may finance
acquisitions by, among other things, issuing debt and equity securities,
including Paired Shares. The issuance of Paired Shares to finance acquisitions
could have a dilutive effect on funds from operations per Paired Share. In that
regard, both the La Quinta and Cobblestone merger agreements are structured in a
way that will require The Meditrust Companies to increase the number of Paired
Shares they issue to consummate those mergers if the average market price of the
Paired Shares (as determined pursuant to the merger agreements) declines below
specified levels. Accordingly, there can be no assurance that acquisitions,
including the proposed La Quinta and

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Cobblestone acquisitions, will not be dilutive to funds from operations per
Paired Share or other operating results, that acquired businesses (including La
Quinta and Cobblestone) will be able to maintain or improve historical results
of operations or contribute to future growth, or that the effect of the La
Quinta and Cobblestone acquisitions (if consummated) on The Meditrust Companies
will be beneficial.

The Meditrust Companies' growth strategy depends, in large part, on their
ability to identify, finance, acquire and successfully operate additional real
estate interests. No assurance can be given that The Meditrust Companies will
find suitable acquisitions, that The Meditrust Companies will be able to
consummate or obtain financing for these acquisitions in a timely manner or at
all, that potential acquisitions will not be acquired by The Meditrust
Companies' competitors or that acquired properties will perform in accordance
with expectations. In that regard, enactment of certain proposed legislation
regarding paired share REITs could make it more difficult for The Meditrust
Companies to consummate acquisitions in the future. See "--REIT Tax Risks;
Paired Share REIT Tax Risks--Pending Legislation Regarding Paired Share REITs"
above.

Consummation of the acquisitions of La Quinta and Cobblestone is subject to
various conditions, including, receipt of appropriate governmental approvals
(including under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended) and, in the case of La Quinta, approval of the shareholders of La
Quinta and Meditrust and, in the case of Cobblestone, approval by Cobblestone's
shareholders, successful completion of a tender offer for certain of
Cobblestone's outstanding debt instruments and receipt of requisite consents to
the amendment of certain covenants in Cobblestone's debt instruments. The
Meditrust Companies may also be required to obtain additional financing in
connection with such mergers, which is not, however, a condition to such
mergers. See "--Financing Risks Relating to Proposed La Quinta and Cobblestone
Acquisitions" below. In addition, if the average price (as determined pursuant
to the merger agreement) of the Paired Shares during the period prior to the
expected closing date of the La Quinta Merger is less than $30.40, then La
Quinta has the right to terminate the merger agreement unless Meditrust
exercises its right to increase the number of Paired Shares issuable in the
merger as provided in the merger agreement. If, however, the average price of
the Paired Shares on such date is less than $28.50, La Quinta has the right to
terminate the merger agreement outright. Moreover, La Quinta and The Meditrust
Companies were named in two substantially similar lawsuits filed after the
announcement of the planned merger with La Quinta. These lawsuits seek
compensatory and injunctive relief on the alleged grounds that the La Quinta
directors violated their fiduciary duty, duty of care and duty of loyalty to La
Quinta shareholders by entering into the merger agreement with Meditrust without
having first invited other bidders. Although The Meditrust Companies believe the
claims are entirely without merit, there can be no assurance that the plaintiffs
in these actions will not be successful or that these actions will not have an
adverse effect on The Meditrust Companies. Among other things, if the plaintiffs
were to prevail in these actions, they might obtain injunctive or other relief
blocking the proposed merger or requiring other action that could adversely
affect the consummation of the proposed merger, as well as monetary damages
against both La Quinta and The Meditrust Companies. La Quinta and The Meditrust
Companies have entered into an agreement in principle with the plaintiffs to
settle these lawsuits. The terms of the settlement would permit the La Quinta
merger to proceed substantially as planned; however, there can be no assurance
that the proposed settlement will be successfully completed. As a result of the
foregoing, and other factors, there can be no assurance that the acquisitions of
La Quinta and Cobblestone will be consummated on their current terms or at all.

Potential Dilutive Effect of Issuance by The Meditrust Companies of Capital
Stock with Purchase Price Adjustment Mechanism

In connection with a private placement by The Meditrust Companies of
8,500,000 paired shares of Series A Non-Voting Convertible Common Stock to
Merrill Lynch International, The Meditrust Companies entered into a Purchase
Price Adjustment Mechanism Agreement, dated as of February 26, 1998, with
Merrill Lynch International (the "Price Adjustment Agreement"), pursuant to
which the parties agreed to adjust the purchase price of the 8,500,000 paired
shares of Series A Non-Voting Convertible Common Stock on or prior to February
26, 1999 by the difference between (i) the market price for the Paired Shares at
the time of the settlement and (ii) a reference price (the "Reference Price")
based on the closing price for the Paired Shares on February 25, 1998 plus a
forward accretion, minus an adjustment to reflect distributions on the Paired
Shares during the transaction period (such difference, the "Price Difference").
If the Price Difference is positive, Merrill Lynch International is obligated to
deliver Paired Shares or cash to The Meditrust Companies equal in value to the
aggregate Price Difference. If the Price Difference is negative, The Meditrust
Companies are obligated to deliver additional Paired Shares equal in value to
the aggregate Price Difference to Merrill Lynch International. In the event that
the market price for the

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Paired Shares at the time of settlement is lower than the Reference Price, The
Meditrust Companies will have to deliver additional Paired Shares to Merrill
Lynch International, which would have dilutive effects on the capital stock of
The Meditrust Companies. Additionally, under certain adverse market conditions,
Merrill Lynch International has the right to accelerate the settlement of all or
a portion of the obligation under the Price Adjustment Agreement. Such early
settlements may force The Meditrust Companies to issue Paired Shares at a
depressed price, which may heighten the dilutive effects on the capital stock of
The Meditrust Companies.

The Meditrust Companies Are Heavily Dependent on Health Care Related Properties
and Will Need to Rely on New Members of Management as They Diversify Their
Operations

As of December 31, 1997, approximately 93% of The Meditrust Companies' real
property portfolio was comprised of health care related real property. Recently,
through acquisitions that are either pending, such as Cobblestone and La Quinta,
or have been consummated, such as the IRI Acquisition, The Meditrust Companies
have begun to diversify their operations as well as their real property
portfolio. The Meditrust Companies are currently in the business of operating a
race track acquired in November 1997 in the Santa Anita Merger, Meditrust
purchased the IRI Golf Courses in February 1998, and, if the La Quinta and
Cobblestone mergers are consummated, The Meditrust Companies will enter the
hotel business and further develop their golf business. To the extent that The
Meditrust Companies are successful in diversifying into new areas through
acquisitions, it is likely that The Meditrust Companies will rely heavily upon
the expertise of the existing management of the acquired businesses or will need
to hire outside management to operate these diversified operations. No assurance
can be given that The Meditrust Companies will be able to hire or retain
experienced management to operate the businesses they acquire or propose to
acquire, which could have a material adverse effect on The Meditrust Companies
and their ability to make distributions to shareholders and to pay amounts due
on their indebtedness.

Health Care Industry Risks

Operating Risks. One of Meditrust's primary businesses is that of buying,
selling, financing and leasing health care related properties. The risks of this
business include, among other things: competition for tenants; competition from
other health care financing providers, a number of which may have greater
marketing, financial and other resources and experience than Meditrust; changes
in government regulation of health care; changes in the availability and cost of
insurance coverage; increases in operating costs due to inflation and other
factors; changes in interest rates; the availability of financing; and adverse
effects of general and local economic conditions.

Concentration of Credit Risks. As of December 31, 1997, long-term care
facilities comprised 51% of Meditrust's real estate investments, and Meditrust's
investments in facilities of its three largest health care operators totaled
approximately 39% of Meditrust's total real estate investments. Such a
concentration in specific types of facilities, as well as in these operators,
could have a material adverse effect on The Meditrust Companies.

Government Regulation May Increase. The health care industry is subject to
changing political, economic, regulatory and demographic influences that may
affect the operators of health care facilities and providers. During the past
several years, the health care industry has been subject to an increase in
government regulation of, among other things, reimbursement rates and certain
capital expenditures. Some elected officials have announced that they intend to
examine certain aspects of the United States health care system, including
proposals which may further increase governmental involvement in health care.
For example, the President and Congress have in the past, and may in the future,
propose health care reforms which could impose additional regulations on
Meditrust and its operators (including Operating Company) or limit the amounts
that operators may charge for services. Meditrust and the operators of its
health care facilities are and will continue to be subject to varying degrees of
regulation and licensing by health or social service agencies and other
regulatory authorities in the various states and localities in which they
operate or in which they will operate.

Reliance on Third-Party Payors; Availability of Reimbursement. The cost of
many of the services offered by the current operators of Meditrust health care
facilities are reimbursed or paid for by third-party payors such as Medicare and
Medicaid programs for elderly, low income and disabled patients and state
Medicaid programs for managed care organizations. No assurance can be given that
third-party reimbursement for Meditrust's operators will continue to be
available or when reimbursement will be offered or that reimbursement rates will
not be reduced. The increase in the number of providers contracting to provide
per person fixed cost health care to a patient population has increased pressure
on third party payors to lower costs.

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The foregoing factors could adversely affect the ability of the operators
of Meditrust's health care facilities (including Operating Company) to generate
revenues and make payments to Meditrust. This, in turn, could materially
adversely affect The Meditrust Companies and their ability to make distributions
to shareholders and to pay amounts due on their indebtedness.

Lodging Industry Risks

In the event the proposed merger with La Quinta is consummated, The
Meditrust Companies will have made a significant investment in hotels and
related lodging facilities. If the La Quinta merger occurs, La Quinta will be
operated as a business unit of Operating Company and its real estate assets will
be owned by Meditrust.

Competition. The results of operations of La Quinta hotels are subject to
general economic conditions, competition, the desirability of particular
locations, the relationship between supply of and demand for hotel rooms and
other factors. La Quinta hotels generally operate in markets that contain
numerous competitors, including a wide range of lodging facilities offering
full-service, limited-service and all-suite lodging options to the public. The
continued success of La Quinta's hotels will be dependent, in large part, upon
their ability to compete in such areas as reasonableness of room rates, quality
of accommodations, name recognition, service level and convenience of locations.
Additionally, an increasing supply of hotel rooms in La Quinta's market segment
and recent consolidations in the lodging industry generally resulting in the
creation of several large, multi-branded hotel chains with diversified
operations may adversely impact La Quinta's financial condition, results of
operations and business. No assurance can be given that demographic, geographic
or other changes in markets will not adversely affect the convenience or
desirability of the locations of La Quinta's hotels. Furthermore, no assurance
can be given that, in the markets in which La Quinta's hotels operate, competing
hotels will not provide greater competition for guests than currently exists,
and that new hotels will not enter such markets.

Geographic Concentration. La Quinta's hotels are concentrated in the
western and southern regions of the United States. As a result, La Quinta is
sensitive to economic and competitive conditions in those regions.

Extensive Employment and Other Governmental Regulations. The hotel business
is subject to extensive federal, state and local regulatory requirements,
including building and zoning requirements, all of which can prevent, delay,
make uneconomical or significantly increase the cost of developing additional
lodging facilities. In addition, La Quinta's hotels and Operating Company are
subject to laws governing their relationship with employees, including minimum
wage requirements, overtime, working conditions, work permit requirements and
discrimination claims. If the merger with La Quinta is consummated, an increase
in the minimum wage rate, employee benefit costs or other costs associated with
employees could adversely affect The Meditrust Companies.

Fluctuations in Operating Results. The lodging industry may be adversely
affected by, among other things, changes in economic conditions, changes in
local market conditions, oversupply of hotel space, a reduction in demand for
hotel space in specific areas, changes in travel patterns, weather conditions,
changes in governmental regulations that influence or determine wages, prices or
construction costs, changes in interest rates, the availability of financing for
operating or capital needs, and changes in real estate tax rates and other
operating expenses. Room supply and demand historically have been sensitive to
shifts in gross domestic product growth, which has resulted in cyclical changes
in average daily room and occupancy rates. Due in part to the strong correlation
between the lodging industry's performance and economic conditions, the lodging
industry is subject to cyclical changes in revenues. In that regard, there can
be no assurance that the recent strength in the lodging industry generally, or
in the segment of the industry in which La Quinta operates, will not decline in
the future. Furthermore, the lodging industry is seasonal in nature, with
revenues typically higher in summer periods than in winter periods.

Risks of Expansion Strategy. If the La Quinta merger is consummated,
Meditrust intends to continue La Quinta's strategy of growth through both the
construction of new lodging facilities and the opportunistic acquisition of
existing lodging facilities. No assurance can be given that Meditrust will find
suitable sites for construction or suitable properties for acquisition or that
these sites and properties will not be acquired by competitors. Meditrust will
incur certain costs in connection with the construction and acquisition of new
properties and may be required to provide significant capital expenditures for
conversions and upgrades when acquiring a property operating as other than a La
Quinta[TM] brand property. No assurance can be given that any of the properties
Meditrust may construct or acquire will be profitable following such
construction or acquisition. The construction or acquisition of a property that
is not profitable, or the acquisition or construction of a property that results
in significant unanticipated conversion costs, or substantial construction cost
overruns, could materially adversely affect The

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Meditrust Companies and their ability to make distributions to shareholders and
to pay amounts due on their indebtedness. Meditrust may in the future require
additional financing in order to continue to make acquisitions and to fund
construction costs of hotel properties. No assurance can be given that such
additional financing will be available to Meditrust on acceptable terms or at
all.

Construction. If the La Quinta merger is consummated and Meditrust
continues La Quinta's strategy of growing through new construction, Meditrust
may from time to time experience shortages of materials or qualified
tradespeople or volatile increases in the cost of certain construction materials
or labor, resulting in longer than normal construction and remodeling periods,
loss of revenue and increased costs. Meditrust will rely heavily on local
contractors, who may be inadequately capitalized or understaffed. The inability
or failure of one or more local contractors to perform may result in
construction or remodeling delays, increased cost and loss of revenue.

The foregoing factors could adversely affect La Quinta's operations which,
in turn, could materially adversely affect The Meditrust Companies and their
ability to make distributions to shareholders and to pay amounts due on their
indebtedness.

Golf Course Industry Risks

Upon consummation of the Cobblestone Merger, the acquisition of the IRI
Golf Courses and the acquisition of thirteen additional golf courses from
several different sellers, The Meditrust Companies will have made a significant
investment in golf courses and related facilities. If the Cobblestone merger
occurs, Cobblestone will be operated as a business unit of Operating Company and
its real estate assets will be owned by Meditrust.

Real Estate Investment Considerations. Investments in golf courses and
related properties are subject to risks typically associated with investments in
real estate. Revenue from golf courses may be affected by many factors,
including changes in government regulations, general or local economic
conditions, the available local supply of golf courses, a decrease in the number
of people playing golf or adverse weather conditions. One factor specifically
affecting real estate investments in golf facilities is the availability of
water. A severe water shortage could adversely affect the revenue received from
these investments.

Geographic Concentration. The golf courses that The Meditrust Companies
will acquire if the Cobblestone merger is consummated are generally located in
sun-belt states. Nine golf facilities are located in Texas, seven in California,
four in Arizona, three in Florida, two in Georgia and one in Virginia. The five
golf courses acquired from IRI are all located in Texas. In addition, The
Meditrust Companies have acquired a golf course in Virginia and have pending
acquisitions from several different sellers of twelve more golf courses that are
located in Florida, Georgia, New Jersey, North Carolina, Texas and Virginia. The
geographic proximity of many of these golf courses may mean that adverse
economic and/or weather conditions in the same geographic area could adversely
affect the operating results of a large portion of The Meditrust Companies' golf
course facilities.

Competition. If the Cobblestone merger is consummated, Meditrust intends to
continue to acquire golf courses. The Meditrust Companies will compete with
several national and regional golf course companies for the purchase, lease and
management of golf courses. No assurance can be given that suitable golf course
acquisition opportunities will be available or that, because of competition from
other purchasers or other reasons, Meditrust will be able to consummate
acquisitions on satisfactory terms or at all or to obtain necessary acquisition
financing. In addition, the acquisition of golf courses may become more
expensive in the future if demand for properties increases.

Cobblestone competes for the purchase, lease and management of golf courses
with several national and regional golf course companies. Several of
Cobblestone's national competitors have larger staffs and more golf courses
currently owned, leased or under management than does Cobblestone. In addition,
several of Cobblestone's national competitors and certain of its smaller,
regional competitors have significantly greater capital resources than does
Cobblestone.

Golf courses are also subject to competition for players and members from
other golf courses located in the same geographic areas. The number and quality
of golf courses in a particular area could have a material adverse effect on the
revenue of a golf course. The availability of sufficient acreage often limits
the number of competing courses, particularly in metropolitan areas. However,
the parts of Arizona and Texas in which many of Cobblestone's existing
properties, and all of the IRI Golf Courses, are clustered have significant open
land available, and there has been continued construction of both public and
private golf facilities in those areas. In addition, revenue will be affected by
a number of factors including, the demand for golf and the availability of other
forms of recreation.

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Consumer Spending and Trends. The amount spent by consumers on
discretionary items, such as those currently offered by, and those expected to
be offered by, Cobblestone and IRI, has historically been dependent upon levels
of discretionary income, which may be adversely affected by general economic
conditions. A decrease in the number of golfers and in consumer spending on golf
and golf associated activities could have a material adverse effect on the
financial condition and results of operations of The Meditrust Companies' golf
course business.

The foregoing factors could adversely affect the operations of Cobblestone
and the IRI Golf Courses, which, in turn, could materially adversely affect The
Meditrust Companies and their ability to make distributions to shareholders and
to pay amounts due on their indebtedness.

Horse Racing Industry Risks

Regulation of Gaming Operations. Operating Company's pari-mutuel wagering
operations at Santa Anita Park (the "Race Track"), conducted by Los Angeles
Turf Club, Incorporated ("LATC"), a subsidiary of The Santa Anita Companies,
Inc. (itself a subsidiary of Operating Company), depend upon the continued
governmental acceptance of such operations as forms of legalized gaming. As a
form of gaming, pari-mutuel wagering is subject to extensive licensing and
regulatory control by the California Horse Racing Board (the "CHRB"). The CHRB
has broad powers with respect to the licensing of gaming operations. It may
revoke, suspend, condition or limit the gaming operations of Operating Company.
Any such change in regulations may have a material adverse effect on The
Meditrust Companies.

Dependence on Relationship with Owners and Trainers Associations. LATC's
horse racing operations require it to maintain good working relationships with
the Thoroughbred Owners of California, or the "Owners Association", and the
California Horsemen's Benevolent and Protective Association, or the "Trainers
Association." If LATC cannot maintain working relationships with the Owners
Association or the Trainers Association or finds itself unable to attract a
sufficient number of horses to its live horse race meets, such events could have
a material adverse effect on The Meditrust Companies.

Competition. Thoroughbred horse racing, and gaming generally, are
competitive industries. Operating Company competes in its markets with other
horse racing facilities, off-track betting, state-run lotteries and Native
American reservation gaming. Many of these competitors have resources that
exceed those of The Meditrust Companies. Operating Company also competes locally
with other sporting and entertainment businesses. Approval of legislation
legalizing casinos and other forms of gaming or expansion of gaming at Native
American reservations could increase competition for Operating Company.
Operating Company also may face increasing competition from businesses accepting
wagers by telephone and via the Internet.

Declines in On-Track Attendance and Wagering Revenue. The Meditrust
Companies believe that many horse racing tracks across the nation, including the
Race Track, are experiencing declines in on-track attendance. In addition,
Operating Company has experienced declining revenues from wagering in recent
years. It cannot be assured that Operating Company will not experience further
declines in on-track attendance and wagering revenues, which could have a
material adverse effect on The Meditrust Companies. In that regard, the amount
of rental revenues received by Meditrust from its lease of the Race Track to
LATC is wholly dependent upon the level of racing activities and wagering.

Seasonality. Operating Company has historically conducted a live
thoroughbred horse racing meet at the Race Track each winter and has sublet the
Race Track each fall for a live thoroughbred racing meet conducted by Oak Tree
Racing Association. The winter and fall meets generate a substantial amount of
Operating Company's horse racing revenue each year. As a result, Operating
Company's horse racing activities are subject to significant seasonal variations
in revenue and net income or loss.

Real Estate Investment Risks

General Risks. Meditrust's investments (including those of La Quinta and
Cobblestone, assuming consummation of their respective mergers) will be subject
to the risks inherent in owning real estate. The underlying value of Meditrust's
real estate investments and The Meditrust Companies' results of operations and
ability to make distributions to their shareholders and pay amounts due on their
indebtedness will depend on the ability of the lessees, the operators and
Operating Company to operate Meditrust's properties in a manner sufficient to
maintain or increase revenues and to generate sufficient revenues in excess of
operating expenses to make rent payments under their leases or loan payments in
respect of their loans from Meditrust.

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Results of operations of Meditrust's properties may also be adversely
affected by, among other things:

o changes in national economic conditions, changes in local market conditions
due to changes in general or local economic conditions and neighborhood
characteristics;

o changes in interest rates and in the availability, cost and terms of
financing;

o the impact of present or future environmental legislation and compliance
with environmental laws and other regulatory requirements;

o the ongoing need for capital improvements, particularly in older
structures;

o changes in real estate tax rates and assessments and other operating
expenses;

o adverse changes in governmental rules and fiscal policies;

o adverse changes in zoning and other land use laws; and

o civil unrest, earthquakes and other natural disasters (which may result in
uninsured losses) and other factors which are beyond its control.

Value and Illiquidity of Real Estate. Real estate investments are
relatively illiquid. Meditrust's ability to vary its portfolio in response to
changes in economic and other conditions will therefore be limited. If Meditrust
wants to sell an investment, no assurance can be given that Meditrust will be
able to dispose of it in the time period it desires or that the sales price of
any investment will recoup or exceed the amount of Meditrust's investment.

Increases in Property Taxes Could Affect Ability to Make Expected
Shareholder Distributions. Meditrust's health care facilities and real estate
investments, La Quinta's and Cobblestone's properties and Meditrust's racing
facilities are all subject to real property taxes. The real property taxes on
properties in which Meditrust invests may increase or decrease as property tax
rates change and as the value of the properties are assessed or reassessed by
taxing authorities. In addition, as a result of acquisitions, certain of
Meditrust's properties may be subject to reappraisal or reassessment. Increases
in property taxes resulting from such reappraisals or reassessments may have an
adverse effect on The Meditrust Companies and their ability to make
distributions to shareholders and to pay amounts due on their indebtedness.

Environmental Matters. The obligation to pay for the cost of complying
with existing environmental laws, ordinances and regulations, as well as the
cost of complying with future legislation, may affect the operating costs of
Meditrust and Operating Company. Under various federal, state and local
environmental laws, ordinances and regulations, a current or previous owner or
operator of real property may be liable for the costs of removal or remediation
of hazardous or toxic substances on or under the property. Environmental laws
often impose liability whether or not the owner or operator knew of, or was
responsible for, the presence of such hazardous or toxic substances and whether
or not such substances originated from the property. In addition, the presence
of hazardous or toxic substances, or the failure to remediate such property
properly, may adversely affect Meditrust's ability to borrow by using such real
property as collateral.

Persons who arrange for the transportation, disposal or treatment of
hazardous or toxic substances may also be liable for the costs of removal or
remediation of hazardous or toxic substances at the disposal or treatment
facility, whether or not such facility is or ever was owned or operated by such
person. Certain environmental laws and common law principles could be used to
impose liability for releases of hazardous materials, including asbestos-
containing materials or "ACMs", into the environment. In addition, third
parties may seek recovery from owners or operators of real properties for
personal injury associated with exposure to released ACMs or other hazardous
materials. Environmental laws may also impose restrictions on the use or
transfer of property, and these restrictions may require expenditures. In
connection with the ownership and operation of any of Meditrust's properties,
Meditrust, Operating Company and the other lessees or operators of these
properties may be liable for any such costs. The cost of defending against
claims of liability or remediating contaminated property and the cost of
complying with environmental laws could materially adversely affect The
Meditrust Companies and their ability to make distributions to shareholders and
to pay amounts due on their indebtedness.

Compliance with the ADA May Affect Expected Distributions to Meditrust's
Shareholders. Under the Americans with Disabilities Act of 1990 (the "ADA"),
all public accommodations are required to meet certain federal requirements
related to access and use by disabled persons. A determination that Meditrust
or Operating

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Company is not in compliance with the ADA could result in the imposition of
fines and/or an award of damages to private litigants. If Meditrust or Operating
Company were required to make modifications to comply with the ADA, there could
be a material adverse effect on The Meditrust Companies and their ability to
make distributions to shareholders and to pay amounts due on their indebtedness.

Uninsured and Underinsured Losses. Each of Meditrust's leases and mortgage
loans typically specifies that comprehensive insurance is to be maintained on
each of the applicable properties, including liability, fire and extended
coverage. Leases and loan documents for new investments (including those leased
to Operating Company) typically contain similar provisions. However, there are
certain types of losses, generally of a catastrophic nature, such as
earthquakes and floods, that may be uninsurable or not economically insurable.
The Meditrust Companies will use their discretion in determining amounts,
coverage limits and deductibility provisions of insurance, with a view to
maintaining appropriate insurance coverage on the investments of Meditrust and
Operating Company at a reasonable cost and on suitable terms. This may result
in insurance coverage that, in the event of a substantial loss, would not be
sufficient to pay the full current market value or current replacement cost of
the lost investment and also may result in certain losses being totally
uninsured. Inflation, changes in building codes, zoning or other land use
ordinances, environmental considerations, lender imposed restrictions and other
factors also might make it infeasible to use insurance proceeds to replace the
property after such property has been damaged or destroyed. Under such
circumstances, the insurance proceeds, if any, received by Meditrust or
Operating Company might not be adequate to restore its economic position with
respect to such property.

Real Estate Financing Risks

Financing and Maturities. Meditrust is subject to the normal risks
associated with debt and preferred stock financing, including the risk that
Meditrust's cash flow will be insufficient to meet required payments of
principal and interest and dividends, the risk that indebtedness on its
properties, or unsecured indebtedness, will not be able to be renewed, repaid
or refinanced when due or that the terms of any renewal or refinancing will not
be as favorable as the terms of such indebtedness. If Meditrust were unable to
refinance the indebtedness on acceptable terms, or at all, Meditrust might be
forced to dispose of one or more of its properties on disadvantageous terms,
which might result in losses to Meditrust, which losses could have a material
adverse effect on Meditrust and its ability to make distributions to
shareholders and to pay amounts due on its indebtedness. Furthermore, if a
property is mortgaged to secure payment of indebtedness and Meditrust is unable
to meet mortgage payments, the mortgagee could foreclose upon the property,
appoint a receiver and receive an assignment of rents and leases or pursue
other remedies, all with a consequent loss of revenues and asset value to
Meditrust. Foreclosures could also create taxable income without accompanying
cash proceeds, thereby hindering Meditrust's ability to meet the REIT
distribution requirements of the Code.

Risk of Rising Interest Rates. Meditrust has incurred and expects in the
future to incur indebtedness which bears interest at variable rates.
Accordingly, increases in interest rates would increase Meditrust's interest
costs (to the extent that the related indebtedness was not protected by
interest rate protection arrangements), which could have a material adverse
effect on Meditrust and its ability to make distributions to shareholders and
to pay amounts due on its indebtedness or cause Meditrust to be in default
under certain debt instruments (including certain debt securities). In
addition, an increase in market interest rates may lead holders of the Paired
Shares to demand a higher yield on their Paired Shares from distributions by
The Meditrust Companies, which could adversely affect the market price for the
Paired Shares and could also adversely affect the market price of any preferred
stock issued by either of The Meditrust Companies.

Additional Debt. Meditrust currently funds acquisition opportunities
partially through borrowings (including its lines of credit). The
organizational documents of Meditrust do not contain any limitation on the
amount of indebtedness that Meditrust may incur. Accordingly, Meditrust could
become more highly leveraged, resulting in an increase in debt service, which
could have a material adverse effect on Meditrust and its ability to make
distributions to shareholders and to pay amounts due on its indebtedness and in
an increased risk of default on its obligations.

Employment and Other Governmental Regulation

The health care, golf, hotel, race track and related businesses of The
Meditrust Companies are subject to varying degrees to extensive federal, state
and local regulatory requirements, including building and zoning requirements,
all of which can prevent, delay, make uneconomical or significantly increase
the cost of developing and maintaining

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existing and additional facilities or properties in the health care, golf,
hotel, race track and related businesses. In addition, La Quinta, Cobblestone
and The Meditrust Companies are subject to laws governing their relationship
with employees, including minimum wage requirements, overtime, working
conditions, work permit requirements and discrimination claims. An increase in
the minimum wage rate, employee benefit costs or other costs associated with
employees could adversely affect The Meditrust Companies and their ability to
make distributions to shareholders and to pay amounts due on their indebtedness.

ERISA Plans May Be Affected by Certain Ownership of REIT Securities

The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and section 4975 of the Code prohibit certain transactions that involve (i)
certain pension, profit-sharing, employee benefit, or retirement plans or
individual retirement accounts (each, a "Plan") and (ii) the assets of a Plan,
on the one hand, and a "party in interest" or "disqualified person" with
respect to such Plan, on the other hand. A "party in interest" or "disqualified
person" with respect to a Plan will be subject to (x) an initial 15% excise tax
on the amount involved in any prohibited transaction involving the assets of
the Plan and (y) an excise tax equal to 100% of the amount involved if any
prohibited transaction is not corrected. Consequently, the fiduciary of a Plan
contemplating an investment in Shares offered by any prospectus supplement
should consider whether The Meditrust Companies, any other person associated
with the issuance of the Shares offered by any prospectus supplement, or any
affiliate of the foregoing is or might become a "party in interest" or
"disqualified person" with respect to the Plan. In such a case, the acquisition
or holding of Shares offered by any prospectus supplement by or on behalf of
the Plan could be considered to give rise to a prohibited transaction under
ERISA and the Code.

Regulations of the Department of Labor that define "plan assets" provide
that in some situations, when a Plan acquires an equity interest in an entity,
the Plan's assets include both the equity interest and an undivided interest in
each of the underlying assets of the entity, unless one or more exceptions
specified in the plan asset regulations are satisfied. In such a case, certain
transactions that The Meditrust Companies might enter into in the ordinary
course of their business and operations might constitute "prohibited
transactions" under ERISA and the Code.

Substantial Leverage Risks

Meditrust has substantial leverage. The degree of leverage of Meditrust
could have important consequences to investors, including the following: (i)
Meditrust's ability to obtain additional financing may be impaired, both
currently and in the future; (ii) a substantial portion of Meditrust's cash
flow from operations must be dedicated to the payment of principal and interest
on its indebtedness, thereby reducing the funds available to Meditrust for
other purposes; (iii) as described below, certain of Meditrust's borrowings are
and will continue to be at variable rates of interest, which exposes Meditrust
to the risk of increased interest rates; (iv) Meditrust may be substantially
more leveraged than certain of its competitors, which may place Meditrust at a
competitive disadvantage; and (v) Meditrust's substantial degree of leverage
may limit its flexibility to adjust to changing market conditions, reduce its
ability to withstand competitive pressures and make it more vulnerable to a
downturn in general economic conditions or its business.

Following the consummation of the La Quinta and Cobblestone mergers, The
Meditrust Companies will have approximately $3.24 billion of pro forma combined
total indebtedness as compared to combined total indebtedness of The Meditrust
Companies, without giving effect to the La Quinta and Cobblestone acquisitions,
of approximately $1.24 billion at that date. The Meditrust Companies also have
filed a Registration Statement on Form S-3 for the issuance of up to $2 billion
in debt and equity securities, all or a portion of which may be issued as debt.
See "The Meditrust Companies--Recent Developments--Shelf Registration
Statement". The Meditrust Companies' credit facilities bear interest at
variable rates based, in part, on The Meditrust Companies' leverage ratio.
Consequently, the incurrence of indebtedness if the La Quinta and Cobblestone
acquisitions are consummated, Meditrust's subsequent distribution of inherited
earnings and profits in connection with the La Quinta Merger (see "--REIT Tax
Risks; Paired Share REIT Tax Risks--Requirement to Distribute Accumulated
Earnings and Profits"), the issuance of additional debt securities and the
resulting increase in the leverage ratio will result in increased interest
expense under The Meditrust Companies' credit facilities. In addition,
increases in market interest rates will also result in increased borrowing cost
for The Meditrust Companies, which may adversely affect The Meditrust Companies
and their ability to make distributions to shareholders and to pay amounts due
on their indebtedness.

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<PAGE>

The foregoing risks associated with the debt obligations of The Meditrust
Companies may adversely affect the market price of Shares offered by any
prospectus supplement and may inhibit the ability of The Meditrust Companies to
raise capital in both the public and private markets.

Risks Related to Restrictions on Dividends and Distributions; Risks Relating to
Restrictive Debt Covenants and Compliance with Debt Instruments

The Meditrust Companies and their subsidiaries are or in the future may
become parties to agreements and debt instruments which restrict or prevent the
payment of dividends on, or the purchase or redemption of, the Paired Shares,
preferred stock or series common stock, including indirect restrictions
(through, for example, covenants requiring the maintenance of specified levels
of net worth) and direct restrictions. In particular, Meditrust is currently a
party to revolving loan agreements (the "Revolving Loan Agreements") which
permit borrowings in an aggregate amount of up to $365 million with Fleet
National Bank, as agent for certain other financial institutions, and with Via
Banque. The Revolving Loan Agreements provide that Meditrust shall not declare
or pay any dividends (other than a dividend payable in capital stock of The
Meditrust Companies) on any of its capital stock if such action would
constitute an event of default or an event which, with the giving of notice or
lapse of time or both, would constitute an event of default under the Revolving
Loan Agreements or any other material agreement to which Meditrust is a party.
Events of default under the Revolving Loan Agreements include, among other
things, failure by Meditrust to comply with certain financial covenants
relating to cash flow coverage, combined tangible net worth, and a ratio of
total liabilities to combined financial net worth. Other events of default
under the Revolving Loan Agreements include failure to pay principal, interest,
fees or reimbursements under letters of credit when due; certain events of
bankruptcy or insolvency or creditor actions with respect to Meditrust and its
subsidiaries; breach of any of the representations, warranties or covenants
under the Revolving Loan Agreements; certain monetary defaults under other debt
instruments of Meditrust; failure to pay all amounts due under the Revolving
Loan Agreements upon the sale or permanent disposition of an operator of
Meditrust's properties who operates more than a specified percentage of
Meditrust's properties; or the occurrence of events of default under any of the
other documents relating to the Revolving Loan Agreements. Likewise, Meditrust
has previously issued debt securities under several indentures (each, an
"Existing Indenture"). As of December 31, 1997, approximately $1,134,594,000 of
borrowings were outstanding under the Existing Indentures. Each Existing
Indenture provides that Meditrust may not pay dividends on any of its capital
stock (other than dividends payable in capital stock) if at the time of such
action an event of default under such Existing Indenture has occurred and is
continuing or would exist immediately after giving effect to such action.
Events of default under the Existing Indentures include a failure by Meditrust,
after the expiration of any applicable grace period, to pay principal or
interest when due, failure by Meditrust after expiration of a grace period to
comply with any agreements in the Existing Indentures, events of default under
any other debt instruments of Meditrust or its subsidiaries if any such event
of default results from either the failure to pay such other indebtedness when
due or acceleration of such other indebtedness, and the commencement of
voluntary or involuntary bankruptcy or similar proceedings with respect to
Meditrust. As a result of the foregoing, in the event of a deterioration in the
financial condition or results of operations of Meditrust or Operating Company,
the terms of the Revolving Loan Agreements, the Existing Indentures or other
instruments or agreements to which The Meditrust Companies or their
subsidiaries are or may in the future become parties could limit or prohibit
the payment of dividends on Paired Shares offered by any prospectus supplement.
Any such limitation or prohibition could have a material adverse effect on the
market price of the Paired Shares. Moreover, any failure of Meditrust to pay
dividends as required by the Code, whether as a result of restrictive covenants
in its debt instruments or otherwise, would result in the loss of its status as
a real estate investment trust under the Code, which would have a material
adverse effect on The Meditrust Companies and their ability to make
distributions to shareholders and to pay amounts due on their indebtedness.

Debt instruments (including the Revolving Loan Agreements and the Existing
Indentures) to which Meditrust is currently a party and to which Meditrust
and/or Operating Company may in the future become parties contain and may
contain a number of significant covenants that, among other things, restrict in
varying degrees the applicable Meditrust Company from disposing of assets,
incurring additional indebtedness, repaying other indebtedness, paying
dividends, creating liens on assets, entering into leases, making investments,
loans or advances, making acquisitions, engaging in mergers or consolidations,
engaging in certain transactions with affiliates and certain other corporate
activities.

A Meditrust Company's ability to remain in compliance with certain such
covenants will depend upon, among other things, its results of operations and
may be affected by events beyond its control, including economic, financial and
industry conditions. Accordingly, there can be no assurance that The Meditrust
Companies will remain in

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compliance with such agreements and covenants. In the event of a default under
such instruments or agreements relating to any indebtedness of the applicable
Meditrust Company, the holders of such indebtedness generally will be able to
declare all such indebtedness, together with accrued interest thereon, to be
due and payable immediately and, in the case of collateralized indebtedness, to
proceed against their collateral. In addition, default under one debt
instrument could in turn permit lenders under other debt instruments to declare
borrowings outstanding thereunder to be due and payable pursuant to
cross-default clauses. Accordingly, the occurrence of a default under any debt
instrument could have a material adverse effect on The Meditrust Companies.

Financing Risks Relating to Proposed La Quinta and Cobblestone Acquisitions

Although the Cobblestone and La Quinta mergers will be financed largely
through the issuance of Paired Shares, The Meditrust Companies are exploring
various alternative means to most effectively finance the cash that will be
payable in connection with the La Quinta merger and the Cobblestone merger,
including costs associated with the earnings and profits distribution (see
"--REIT Tax Risks; Paired Share REIT Tax Risks" above), the cash consideration
to be paid in the La Quinta merger pursuant to cash elections by La Quinta
shareholders and the other costs associated with the proposed mergers, such as
the refinancing and assumption of certain La Quinta debt and the repayment of
certain Cobblestone debt. This financing may consist of, among other things,
public or private offerings of equity or debt securities, borrowings under the
Revolving Loan Agreements, or a combination thereof. No assurance can be given,
however, that The Meditrust Companies will successfully obtain the financing
necessary to consummate the mergers, or if obtained, that such financing will
be on terms and conditions favorable to The Meditrust Companies. The Meditrust
Companies' obligations under the La Quinta merger agreement and the Cobblestone
merger agreement are not conditioned on the obtaining of financing.

Possible Effects of Failure to Consummate the Pending Acquisitions

It cannot be assured that the mergers with La Quinta and Cobblestone will
be completed. The Meditrust Companies have incurred substantial expenses in
connection with the proposed acquisition of La Quinta and Cobblestone. The
Meditrust Companies may also be responsible for a sizable termination fee,
under certain circumstances, if the La Quinta merger does not occur. The La
Quinta merger agreement provides that a termination fee of $75 million may be
payable by La Quinta or Meditrust, as the case may be, in the event that the
merger agreement is terminated for certain reasons or certain other events
occur under the merger agreement. In addition, if the Cobblestone acquisition
is not consummated, Cobblestone's expertise in developing, operating and
managing golf courses would not be available to The Meditrust Companies.

Restrictions on Transfer of Capital Stock; Repurchase of Capital Stock

In order to qualify as a REIT under the Code, Meditrust's capital stock
must be held by 100 or more shareholders and more than 50% of its capital stock
may not be held by five or fewer individuals (taking into account applicable
attribution of ownership rules). The Meditrust Companies' respective by-laws
contain provisions intended to preserve the status of Meditrust as a REIT for
federal income tax purposes. Among other things, the by-laws of each Meditrust
Company provide that, if its Board of Directors shall at any time be of the
opinion that direct or indirect ownership of shares of its capital stock has or
may become concentrated to an extent that would cause Meditrust to fail to
qualify or to be disqualified as a REIT under the Code, or to an extent that
would cause any rent to be paid to Meditrust to fail to qualify or to be
disqualified as rent from real property for purposes of the Code, the Board of
Directors of such Meditrust Company may call for the purchase from any
shareholder of such Meditrust Company such number of shares sufficient, in the
opinion of the Board of Directors, to maintain or bring the direct or indirect
ownership of shares of stock of such Meditrust Company into conformity with 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 or, if no quotation for the
shares is available, as determined in good faith by the Board of Directors.
From and after the date fixed for purchase by the Board of Directors as
aforesaid, the holders of any shares so called for purchase shall cease to be
entitled to dividends, voting rights and other benefits with respect to such
shares, excepting only the right to payment of the purchase price fixed as
aforesaid. Such purchase price may be paid in cash or, at the option of the
Board of Directors, in the form of subordinated indebtedness equal to the
purchase price of the shares (less amounts paid in cash, if any), which
subordinated indebtedness shall have such other terms as may be determined by
the Board of Directors. In

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addition, the by-laws of each Meditrust Company provide that such Meditrust
Company may refuse to transfer shares of stock to any person whose acquisition
of such shares would, in the opinion of its Board of Directors, result in
Meditrust being unable to conform to the requirements of the Code referred to
above. The by-laws also provide that any transfer of shares that would prevent
Meditrust from continuing to be qualified as a REIT under the Code shall be void
and the intended transferee of such shares shall be deemed never to have had an
interest therein. If the foregoing provision is determined to be invalid, the
by-laws also provide that the transferee of such shares shall be deemed to have
acted as agent on behalf of Meditrust or Operating Company, as applicable, in
acquiring such shares and to hold such shares on behalf of Meditrust or
Operating Company, as applicable.

Year 2000 Issues

The Meditrust Companies have begun the process of identifying, evaluating
and implementing changes to computer programs necessary to address the year
2000 issue. This issue affects computer systems that have programs that may not
properly recognize the year 2000. This could result in system failures or
miscalculations. The Meditrust Companies are currently addressing their
internal year 2000 issues, with modifications to existing programs and
conversions to new programs. The Meditrust Companies are also communicating
with financial institutions, software vendors and others with which they
conduct business to help them identify and resolve the year 2000 issue. The
total cost of converting all internal systems has not been completely
quantified, but it is not expected to be a material cost. However, no estimates
can be made as to the potential adverse impact that may result from the
financial institutions, software vendors and others with which the Companies
conduct business. Costs related to the year 2000 issue are being expensed as
incurred.

Cautionary Statements Concerning Forward-Looking Statements

Any statements in this Prospectus or any prospectus supplement, including
any statements in the documents that are incorporated by reference as set forth
on page 2 under "Available Information," that are not strictly historical are
forward-looking statements within the meaning of the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Any such forward-looking
statements contained or incorporated by reference herein or in any prospectus
supplement should not be relied upon as predictions of future events. Certain
such forward-looking statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "pro forma," "estimates" or "anticipates"
or the negative thereof or other variations thereof or comparable terminology,
or by discussions of strategy, plans, intentions or anticipated or projected
events, results or conditions. Such forward-looking statements are necessarily
dependent on assumptions, data or methods that may be incorrect or imprecise
and they may be incapable of being realized. Such forward-looking statements
include statements with respect to (i) the declaration or payment of
distributions by the Meditrust Companies, (ii) the ownership, management and
operation of hotels, golf courses, health care related facilities, race tracks
and other properties, including the integration of the acquisitions effected or
proposed by The Meditrust Companies, (iii) potential acquisitions or
dispositions of properties, assets or other public or private companies by The
Meditrust Companies, including the acquisitions of La Quinta and Cobblestone,
(iv) the policies of The Meditrust Companies and (if the mergers with La Quinta
and Cobblestone are consummated) La Quinta and Cobblestone regarding
investments, acquisitions, dispositions, financings, conflicts of interest and
other matters, (v) the qualification of Meditrust and Meditrust's Predecessor
as a REIT under the Code and the "grandfathering" rules under Section 269B of
the Code, (vi) the health care, real estate, golf and lodging industries and
real estate markets in general, (vii) the availability of debt and equity
financing, (viii) interest rates, (ix) general economic conditions, (x) supply
and customer demand, (xi) trends affecting The Meditrust Companies, and, if the
mergers are consummated, La Quinta's and Cobblestone's financial condition or
results of operations, (xii) the effect of acquisitions (including the proposed
La Quinta and Cobblestone acquisitions) on capitalization and financial
flexibility, (xiii) the anticipated performance of The Meditrust Companies and
of acquired properties and businesses, including, without limitation,
statements regarding anticipated revenues, cash flows, funds from operations,
EBITDA, operating or profit margins and sensitivity to economic downturns or
anticipated growth or improvements in any of the foregoing, (xiv) conditions or
prospects in the health care, lodging, golf and other industries, including
anticipated growth of profitability, and the sensitivity of certain segments of
those industries to economic downturns, (xv) the ability of The Meditrust
Companies and of acquired properties and businesses to grow (including La
Quinta's ability to renovate hotels and open new hotels as planned), (xvi)
Meditrust's funds from operations payout ratio after giving effect to
anticipated acquisitions and (xvii) proposed tax legislation that, if enacted,
may adversely affect The Meditrust Companies. Shareholders are cautioned that,
while forward looking statements reflect the

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respective companies' good faith beliefs, they are not guarantees of future
performance and they involve known and unknown risks and uncertainties. Actual
results may differ materially from those in the forward-looking statements as a
result of various factors. The information contained or incorporated by
reference in this Prospectus or any prospectus supplement hereto, including
without limitation the information set forth in "Risk Factors" or in any risk
factors included in a prospectus supplement hereto or in documents that are
incorporated by reference in this Prospectus or any prospectus supplement
hereto, identifies important factors that could cause such differences. The
Meditrust Companies undertake no obligations to publicly release the results of
any revisions to these forward-looking statements that may reflect any future
events or circumstances.

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THE MEDITRUST COMPANIES

Overview

Meditrust is a Delaware corporation that qualifies as a REIT under the
Code. Meditrust has historically invested primarily in health care related real
property. Meditrust also invests in other entities outside of the United States
which make similar health care related real property investments. In addition to
its health care related real property investments, Meditrust owns Santa Anita
Park in California.

Operating Company is a Delaware corporation which currently operates the
thoroughbred horse racing business at Santa Anita Park.

Meditrust and Operating Company have an organizational structure called a
"paired share structure" such that the shares of capital stock of both companies
trade and are transferable as a single unit. The paired share structure allows
the shareholders of The Meditrust Companies to enjoy the economic benefits of
owning both a company that owns and leases real estate and a company that
operates businesses that use real estate. Currently, this structure generally
permits the combined companies to reduce the amount of payments to third parties
who traditionally would operate the businesses conducted on the REIT's real
estate for a fee because the Operating Company is permitted to operate such
businesses and receive the operating and management fees that would otherwise be
paid to the third party. There are currently pending legislative proposals,
however, which, if enacted, could substantially limit The Meditrust Companies'
ability to use the paired share structure in the future. See "Risk Factors--REIT
Tax Risks; Paired Share REIT Tax Risks."

On November 5, 1997 the predecessors of Meditrust and Operating Company
merged with and into Santa Anita Realty Enterprises, Inc. and Santa Anita
Operating Company, respectively, which had been operating under the paired
share structure. Upon consummation of the Santa Anita Mergers, Santa Anita
Realty changed its name to "Meditrust Corporation" and Santa Anita Operating
changed its name to "Meditrust Operating Company."

Meditrust Corporation's principal executive offices are located at 197
First Avenue, Suite 300, Needham Heights, Massachusetts 02194, and the
telephone number is (781) 433-6000. Meditrust Operating Company's principal
executive offices are located at 197 First Avenue, Suite 100, Needham Heights,
Massachusetts 02194, and the telephone number is (781) 453-8062.

Recent Developments

La Quinta Merger. On January 3, 1998, The Meditrust Companies entered into
a merger agreement with La Quinta pursuant to which La Quinta will merge with
and into Meditrust with Meditrust being the surviving corporation (the "La
Quinta Merger"). If the La Quinta merger is consummated, holders of La Quinta
common stock will receive in exchange therefor newly-issued Paired Shares of The
Meditrust Companies, cash or a combination thereof, with an aggregate value of
approximately $2.1 billion, subject to certain adjustments. In addition,
Meditrust will assume approximately $900 million of La Quinta's existing
indebtedness.

La Quinta is a fully-integrated lodging company that focuses on the
ownership, operation and development of its two hotel products: (i) La Quinta
Inns, a chain positioned in the mid-price segment without food and beverage
facilities, and (ii) La Quinta Inn & Suites, a new concept positioned at the
upper end of the mid-price segment without food and beverage facilities. As of
April 22, 1998, La Quinta owned and operated 274 hotels with a total of over
35,000 rooms.

The La Quinta Merger is expected to close in the second quarter of 1998 and
is subject to various conditions, including approval of the La Quinta Merger by
two-thirds of the outstanding shares of La Quinta common stock and by a majority
of the outstanding shares of Meditrust, and approval from various regulatory
agencies. On May 18, 1998, The Meditrust Companies filed Pre-Effective Amendment
No. 4 to their Joint Registration Statement on Form S-4 (the "La Quinta
Registration Statement"), in connection with the pending La Quinta Merger. On
May 18, 1998, the Securities and Exchange Commission declared the La Quinta
Registration Statement effective and on May 20, 1998, The Meditrust Companies
and La Quinta began mailing out to their shareholders the Joint Proxy Statement/
Prospectus contained in the La Quinta Registration Statement.

Cobblestone Merger. On January 11, 1998, The Meditrust Companies entered
into a merger agreement with Cobblestone pursuant to which Cobblestone will
merge with and into Meditrust with Meditrust being the surviving corporation
(the "Cobblestone Merger"). Pursuant to the merger agreement, upon the closing
of the Cobblestone

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Merger holders of all of the outstanding preferred and common stock of
Cobblestone will receive in exchange therefor newly-issued Paired Shares of The
Meditrust Companies, which Paired Shares are being offered for resale by the
Selling Stockholders pursuant to this Prospectus. In addition, under the terms
of the Cobblestone merger agreement, approximately $169 million of Cobblestone
debt and associated costs will be refinanced. The Cobblestone Merger has been
approved by the requisite holders of the preferred and common stock of
Cobblestone, and is expected by The Meditrust Companies to close in the second
quarter of 1998.

The number of Paired Shares issuable in connection with the Cobblestone
Merger is subject to adjustment as described in the Cobblestone merger agreement
based on a number of factors, including the average per share closing price of
the Paired Shares on the NYSE for the five trading day period ending on the
third trading day prior to the closing date of the Cobblestone Merger (the
"Average Closing Price"). The Meditrust Companies currently expect to issue to
the Selling Stockholders at closing approximately 8,200,000 Paired Shares with
an aggregate market value of approximately $231,100,000 (assuming the Average
Closing Price is equal to $28.1875, the closing price of the Paired Shares on
the NYSE on May 22, 1998). The actual number of Paired Shares issued at closing
and the related aggregate market value could be materially more or less than
such estimates.

Cobblestone is a privately-held company and one of the leading owners and
operators of golf courses in the United States. Cobblestone has a portfolio of
26 facilities with 31 courses in major golf markets in Arizona, California,
Florida, Georgia, Texas and Virginia. The portfolio includes 11 private country
clubs, 7 semi-private clubs and 8 daily fee courses.

On March 6, 1998, Meditrust entered into an agreement to acquire five golf
courses from IRI, a privately held owner and manager of golf facilities, for $41
million in cash. Meditrust completed the acquisition of three of the courses on
the same date, and the acquisitions of the other two courses closed shortly
threafter. Prior to the consummation of the Cobblestone Merger, these golf
courses will be managed by Cobblestone. IRI and Cobblestone also announced a new
strategic alliance under which IRI will develop and build new courses to be
owned and operated by Cobblestone. In addition, Meditrust acquired an 18-hole
golf course facility in Virginia on May 4, 1998, for $8.65 million in cash, and
has agreed to acquire a total of twelve additional golf courses from several
different sellers for an aggregate of $130 million in cash. There can be no
assurance that these pending acquisitions will be completed.

Forward Equity Placement. On February 26, 1998, The Meditrust Companies
entered into two transactions with Merrill Lynch International, a UK-based
broker/dealer subsidiary of Merrill Lynch. Pursuant to the terms of a stock
purchase agreement, Merrill Lynch International agreed to purchase 8,500,000
shares of Series A Non-Voting Convertible Common Stock (the "Series A Stock")
from The Meditrust Companies at a purchase price of $32.625 per share. The
Series A Stock, which was issued on February 27, 1998, is initially non-voting
and will convert into voting Paired Shares on the earlier of (a) the business
day following the date on which shareholders of The Meditrust Companies have
approved the La Quinta Merger or (b) the date of any termination of the La
Quinta merger agreement. Additionally, pursuant to the stock purchase agreement,
Merrill Lynch International is prohibited from disposing of these Paired Shares
during the period in which the Meeting Date Price (as defined in the La Quinta
merger agreement) is determined. Pursuant to the terms of a purchase price
adjustment agreement, The Meditrust Companies will, within one year from the
date of the purchase of the Series A Stock, adjust the original purchase price
per share based on a decrease in market price of the Paired Shares at the time
of the adjustment, by receiving Paired Shares or cash from Merrill Lynch
International or by issuing additional Paired Shares to Merrill Lynch
International. See "Risk Factors--Potential Dilutive Effect of Issuance by The
Meditrust Companies of Capital Stock with Purchase Price Adjustment Mechanism."

Shelf Registration Statement. On May 22, 1998, The Meditrust Companies
filed Pre-Effective Amendment No. 3 to their Joint Registration Statement on
Form S-3 relating to the proposed offering from time to time of shares of common
and preferred stock of The Meditrust Companies with an aggregate offering price
of up to $2,000,000,000. Such securities will be offered in amounts, at prices
and on terms to be determined at the time of offering. See "Risk
Factors--Financing Risks Relating to Proposed La Quinta and Cobblestone
Acquisitions."

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DESCRIPTION OF CAPITAL STOCK

Authorized Capital Stock

Each of The Meditrust Companies' authorized capital stock consists of
270,000,000 shares of common stock, par value $.10 per share, 30,000,000 shares
of series common stock, par value $.10 per share and 6,000,000 shares of
preferred stock, par value $.10 per share. The board of directors of each
company is authorized, without further shareholder approval, to issue the
preferred stock from time to time 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. Such preferred shares may be subject to the pairing
agreement described below.

The Meditrust Companies Paired Shares are traded on the NYSE under the
ticker symbol "MT." As of May 20, 1998 there were 89,875,628 shares of Meditrust
Common Stock issued and outstanding, 88,570,251 shares of Operating Common Stock
issued and outstanding and 8,500,000 shares of Series A Non-Voting Convertible
Common Stock of each of Meditrust and Operating Company (described below) issued
and outstanding. No shares of preferred stock were issued and outstanding.

Common Stock

Subject to provisions of law and the preferences of any series of preferred
stock which may be issued, holders of the Paired Shares are entitled to receive
dividends at times and in amounts as are declared from time to time by The
Meditrust board of directors or the Operating Company board of directors out of
funds legally available for dividends. To maintain eligibility as a REIT,
Meditrust must in general distribute to its shareholders at least 95% of its
"real estate investment trust taxable income" before deduction of dividends paid
(less any net long-term capital gain and certain other adjustments). See
"Certain Federal Income Tax Consideration--REIT Qualifications of the
Corporation."

Holders of Paired Shares are entitled to one vote for each share held on
each matter submitted to a shareholder vote. Except as otherwise provided by
law, or by the certificates of incorporation or by resolutions of the boards of
directors of The Meditrust Companies providing for the issuance of any series of
preferred stock, the holders of the Paired Shares have sole voting power.

Series Common Stock

Series common stock may be issued from time to time in one or more series.
The boards of directors of The Meditrust Companies are authorized to fix or
alter the dividend rights, dividend rate, conversion rights, voting rights,
rights and terms of redemption (including sinking fund provisions), the
redemption price or prices, and the liquidation preferences of any wholly
unissued series of series common stock and the number of shares constituting any
such series and the designation thereof, or all or any of them.

Meditrust and Operating Company have each designated 10,000,000 shares of
series common stock as "Series A Non-Voting Convertible Common Stock" which are
paired in units consisting of one share of Series A Non-Voting Convertible
Common Stock for each company. The holders of paired shares of Series A
Non-Voting Convertible Common Stock shall have the same rights and privileges as
the holders of Paired Shares, including dividend and liquidation rights, except
that they have no right to vote. The paired shares of Series A Non-Voting
Convertible Common Stock will convert into Paired Shares on the earlier of (i)
the next business day after Meditrust and Operating Company shareholders approve
the La Quinta Merger or (ii) the date that the La Quinta merger agreement is
terminated. See "Risk Factors--Potential Dilutive Effect of Issuance by The
Meditrust Companies of Capital Stock with Purchase Price Adjustment Mechanism."

Preferred Stock

Each of the Meditrust board of directors and the Operating Company board of
directors is authorized to issue shares of preferred stock in one or more
series, to establish the number of shares in each series and to fix the
designation, powers, preferences and rights of each such series and the
qualifications, limitations or restrictions thereof. Because each of the
Meditrust board of directors and the Operating Company board of directors has
the power to establish the preferences and rights of each class or series of
preferred stock, each such board may afford the shareholders of any series or
class of preferred stock preferences, powers and rights, voting or otherwise,
senior

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to the rights of holders of shares of Meditrust Common Stock or Operating
Company Common Stock, respectively. The issuance of shares of preferred stock
could have the effect of delaying or preventing a change in control of The
Meditrust Companies.

Rights Agreement and Certain Other Anti-Takeover Provisions

Meditrust has in effect a shareholder rights plan which is summarized under
the heading "Description of Capital Stock of the Santa Anita Companies--Rights
Agreement" in the Santa Anita S-4, incorporated herein by reference. This rights
plan could make it more difficult for a third party to gain control of The
Meditrust Companies, and could have the effect of delaying or preventing a
merger, tender offer or other attempt to take over The Meditrust Companies.

Certain provisions of DGCL and the certificates of incorporation and
by-laws of The Meditrust Companies could have a potential for similar
anti-takeover effects. These provisions are summarized under "The Mergers--
Material Differences in the Rights of Shareholders of The Santa Anita Companies
and Meditrust and MAC--Fair Price Provisions and Shareholder Rights Plan" and
"--Business Combinations with Interested Stockholders" in the Santa Anita S-4.
See "Available Information."

The Pairing

Pursuant to a pairing agreement by and between Meditrust and Operating
Company, dated as of December 20, 1979, as amended, the shares of capital stock
of Meditrust and Operating Company are transferable and tradeable only in
combination as units, each unit consisting of one share of Meditrust stock and
one share of Operating Company stock. These restrictions on the transfer of
shares of Meditrust stock and Operating Company stock are imposed by The
Meditrust Companies' By-laws. The pairing is evidenced by "back-to-back" stock
certificates; that is, certificates evidencing shares of Operating Company stock
are printed on the reverse side of certificates evidencing shares of Meditrust
stock. The certificates bear a legend referring to the restrictions on transfer
imposed by The Meditrust Companies' By-laws. To permit proper allocation of the
consideration received in connection with the sale of Paired Shares, the pairing
agreement provides that Meditrust and 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, Meditrust may not own, directly or indirectly, after
application of the attribution rules of the Code, 10% or more of the outstanding
shares of Operating Company Common Stock, if Meditrust is to qualify as a REIT.
Moreover, Meditrust Common Stock must be held by 100 or more shareholders and
50% or more of the Meditrust Common Stock may not be held by or for five or
fewer individuals. The Meditrust Companies' By-laws provide that 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 Meditrust not to be in conformance
with the requirements of the Code shall be void; 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 Meditrust or Operating Company, as applicable, in
acquiring such shares and to hold such shares on behalf of Meditrust or
Operating Company, as applicable. In addition, The Meditrust 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 REIT, the
board of directors of Meditrust or 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. See "Certain Federal Income
Tax Considerations--REIT Qualification of the Corporation." See also "Risk
Factors--Restrictions on Transfers of Capital Stock; Repurchases of Capital
Stock."

Registrar and Transfer Agent

The Meditrust Companies' Registrar and Transfer Agent is State Street Bank
and Trust Company.

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CERTAIN 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 Shares to the extent those
considerations relate to the federal income taxation of Meditrust, Operating
Company and U.S. Stockholders (as defined below) that hold the Paired Shares as
capital assets. For the particular provisions that govern Federal income tax
treatment of Meditrust 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
Registration Statement 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 MEDITRUST
COMPANIES' SECURITIES.

REIT Qualification of Meditrust

General. Meditrust believes that, prior to the consummation of the La
Quinta and Cobblestone Mergers, Meditrust qualified as a REIT. Meditrust intends
to operate following these mergers in a manner so that it will continue to
qualify as a REIT. If Meditrust failed to qualify as a REIT in any taxable year,
it would be subject to federal income taxation as if it were a domestic
corporation, and its stockholders would be taxed in the same manner as
stockholders of ordinary corporations. In this event, Meditrust could be subject
to potentially significant tax liabilities, and the amount of cash available for
distribution to stockholders would be reduced and possibly eliminated. Unless
entitled to relief under certain Code provisions, Meditrust also would be
disqualified from re-electing REIT status for the four taxable years following
the year during which qualification was lost. Failure of Meditrust's Predecessor
to have qualified as a REIT could also disqualify Meditrust as a REIT and/or
subject Meditrust to significant tax liabilities.

In the opinion of Nutter, McClennen & Fish, LLP, special tax counsel to
Meditrust, (the "REIT Opinion"), (i) Meditrust's Predecessor was organized and
operated in conformity with the requirements for qualification and taxation as a
REIT under the Code since its taxable year ended December 31, 1989 through its
final taxable year, and (ii) Meditrust has been organized and operated in
conformity with the requirements for qualification as a REIT under the Code
since its taxable year ended December 31, 1992 through its taxable year ended
December 31, 1997, and Meditrust's form of organization and proposed method of
operation will enable it to continue to meet the requirements for qualification
and taxation as a REIT under the Code. The REIT Opinion is filed as an exhibit
to the Registration Statement. The REIT Opinion is based upon factual
representations from Meditrust regarding Meditrust's Predecessor and Meditrust's
compliance with the requirements for REIT qualification, and it will not be
binding on the IRS.

Counsel is unable, however, to render an opinion regarding Meditrust's
qualification as a REIT in its taxable years ended December 31, 1989, 1990 and
1991 because it did not conduct the due diligence necessary to render an opinion
for such years. A revocation or termination of Meditrust's qualification as a
REIT in its taxable years ended December 31, 1989, 1990 or 1991 could
potentially have prevented Meditrust from qualifying as a REIT through its
taxable years ended December 31, 1994, 1995 and 1996, respectively (even if
otherwise organized and operated in conformity with the requirements for
qualification and taxation as a REIT under the Code), but would not have
precluded its qualification as a REIT for later years. This is true because a
revocation or termination of Meditrust's qualification as a REIT could preclude
Meditrust from re-electing REIT status for five years. However, Meditrust
believes that any revocation or termination of Meditrust's qualification as a
REIT in its taxable years ended December 31, 1989, 1990 or 1991 or other failure
to qualify as a REIT in such years would not have a material adverse tax effect
on Meditrust or its shareholders, even if such event caused Meditrust to fail to
qualify as a REIT in its taxable years ended December 31, 1994, 1995 or 1996. A
failure of Meditrust to have qualified as a REIT in its taxable years ended
December 31, 1994 and 1996 could not have an adverse tax effect on Meditrust or
its shareholders because Meditrust sustained a net loss for those years, as
indicated on its federal income tax returns, and thus would not have incurred
any federal income tax even if it had been precluded from qualifying as a REIT

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for such years. With respect to Meditrust's taxable year ended December 31,
1995, any failure to have qualified as a REIT for such year would not have a
material adverse tax effect on Meditrust or its shareholders because Meditrust's
tax liability would have been nominal on a per share basis. Any adjustment to
tax for years prior to 1994 generally would be precluded by the statute of
limitations.

Meditrust's qualification and taxation as a REIT following the Cobblestone
and La Quinta mergers will depend on Meditrust's continuing ability to meet,
through actual operating results, the income and asset requirements,
distribution levels, diversity of stock ownership and other requirements for
qualification as a REIT under the Code. Counsel has not verified and will not
verify Meditrust's compliance with these tests on a continuing basis. Moreover,
qualification as a REIT involves the application of highly technical and complex
Code provisions for which there are only limited judicial or administrative
interpretations and the determination of various factual matters and
circumstances not entirely within Meditrust's control. The complexity of these
provisions is greater in the case of a REIT that owns real estate and leases it
to a corporation with which its stock is paired. Accordingly, no assurance can
be given that Meditrust will satisfy such tests on a continuing basis or that
the IRS will not challenge the status of Meditrust as a REIT prior to or
following the Cobblestone and La Quinta mergers. See "Risk Factors--REIT Tax
Risks; Paired Share REIT Tax Risks."

In rendering the REIT Opinion, Nutter, McClennen & Fish, LLP has relied
upon the representations of Meditrust that it will distribute, with respect to
the taxable year in which each merger closes, all earnings and profits inherited
from Cobblestone and La Quinta. If the IRS were to determine that Cobblestone's
or La Quinta's actual earnings and profits exceeded the amount distributed,
Meditrust would be disqualified as a REIT.

To qualify for tax treatment as a REIT under the Code, Meditrust must meet
the following requirements, among others:

(a) At least 95% of Meditrust's gross income each taxable year (excluding
any income from so-called "prohibited transactions") must be derived from:

(i) rents from real property;

(ii) gain from the sale or disposition of real property that is not
held primarily for sale to customers in the ordinary course of business;

(iii) interest on obligations secured by mortgages on real property
(with certain minor exceptions);

(iv) dividends or other distributions from, or gains from the sale of,
shares of REITs that are not held primarily for sale to customers in the
ordinary course of business;

(v) abatements and refunds of real property taxes;

(vi) income and gain derived from foreclosure property;

(vii) most types of commitment fees related to either real property or
mortgage loans;

(viii) gains from sales or dispositions of real estate assets that are
not "prohibited transactions" under the Code;

(ix) dividends;

(x) interest on obligations other than those secured by mortgages on
properties; and

(xi) 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 Meditrust's gross income each taxable year
(excluding any income from "prohibited transactions") must be derived from items
(i) through (viii) above and from certain 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"

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is also defined to exclude: (A) 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); (B) 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 Meditrust; (C) any amount received or accrued from property that
Meditrust manages or operates and for which Meditrust furnishes services to the
tenants that 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 Meditrust does
not derive or receive income; and (D) any amount received or accrued from
property with respect to which Meditrust furnishes (whether or not through an
independent contractor) services not customarily rendered to tenants in
properties of a similar class in the geographic market in which the property is
located, other than a de minimis amount (defined in the Code as 1% of all
amounts received or accrued with respect to the property). The amount received
for any service for this purpose shall be deemed to be not less than 150% of the
direct cost to the REIT in furnishing or rendering the service. Meditrust
believes that any services furnished to its 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
would not jeopardize Meditrust's REIT status.

If Meditrust 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 wilful neglect and if certain
other requirements are met, then Meditrust 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.

(b) At the close of each quarter of its taxable year, Meditrust must also
satisfy three tests relating to the nature of its assets. First, at least 75% of
the value of Meditrust's total assets must be represented by real estate assets
(including (i) assets held by Meditrust's qualified REIT subsidiaries and
Meditrust's allocable share of real estate assets held by partnerships in which
Meditrust owns an interest, (ii) stock in other REITs and (iii) stock or debt
instruments that were purchased with the proceeds of a stock offering or a
long-term (at least five years) public debt offering of Meditrust and are not
held for merger for more than one year, cash items and governmental securities).
Second, not more than 25% of Meditrust's total assets may be represented by
securities other than those in the 75% asset class. Third, of the securities
that are not qualified for purposes of the 75% asset class, the value of any one
issuer's securities owned by Meditrust may not exceed 5% of the value of
Meditrust's total assets and Meditrust may not own more than 10% of any one
issuer's outstanding voting securities. Meditrust's share of income earned or
assets held by a partnership in which Meditrust is a partner will be
characterized by Meditrust in the same manner as they are characterized by the
partnership for purposes of the assets and income requirements described in this
paragraph (b) and in paragraph (a) above.

(c) The shares of Meditrust 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 Meditrust and Operating Company (or their
respective subsidiaries), no person may own, actually or constructively, 10% of
more of the outstanding voting power or total number of shares of stock of the
two companies. The By-laws of Meditrust and Operating Company prohibit any
transfer of shares which would cause the ownership of shares not to be in
conformity with the above requirements. Each year Meditrust 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.

(d) Meditrust 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

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<PAGE>

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 foreclosure property over the tax imposed on such income by the Code; less
(ii) a portion of certain noncash items of Meditrust 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. For purposes of this analysis, certain
dividends paid by Meditrust after the close of the taxable year may be
considered as having been paid during the taxable year. However, any such
dividends may result in the imposition of the 4% REIT excise tax, which would be
applicable to the extent that Meditrust does not actually distribute during each
year 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.

If a determination (by a court or by the Internal Revenue Service) requires
an adjustment to Meditrust's taxable income that results in a failure to meet
the percentage distribution requirements (e.g., a determination that increases
the amount of Meditrust's real estate investment trust taxable income),
Meditrust 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. Meditrust will, however, be liable for
interest based on the amount of the deficiency dividend.

(e) The directors of Meditrust must have authority over the management of
Meditrust, the conduct of its affairs and, with certain limitations, the
management and disposition of Meditrust's property.

(f) Meditrust must have the calendar year in its annual accounting period.

(g) Meditrust must not have any undistributed earnings and profits
accumulated during any "C" corporation years (including any such earnings and
profits attributable to Meditrust as a result of the La Quinta Merger or the
Cobblestone Merger).

(h) Meditrust must satisfy certain procedural requirements.

Paired Shares. On October 17, 1979, the IRS issued a Private Letter Ruling
(the "Ruling") to Meditrust (formerly known as Santa Anita Realty Enterprises,
Inc.) in which the IRS held that the pairing of Santa Anita Realty and Santa
Anita Operating shares would not preclude Meditrust from qualifying as a REIT.
Subsequent to the issuance of the Ruling, (i) the IRS announced that it would no
longer issue rulings to the effect that a REIT whose shares are paired with
those of a non-REIT will qualify as a REIT if the activities of the paired
entities are integrated, and (ii) Congress, in 1984, enacted Section 269B of the
Code. 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 Meditrust and Operating Company,
then Meditrust 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 Meditrust and Operating Company. By its terms, this "grandfathering"
rule will continue to apply to Meditrust after the La Quinta Merger and the
Cobblestone Merger. There are, however, no judicial or administrative
authorities interpreting this "grandfathering" rule in the context of a merger
or otherwise, and this interpretation, as well as the opinion of Nutter,
McClennen & Fish, LLP, regarding Meditrust'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 Meditrust REIT status despite its grandfathered
status. If for any reason Meditrust failed to qualify as a REIT in 1983, the
benefit of the "grandfathering" rule would not be available to Meditrust, in
which case Meditrust would not qualify as a REIT for any taxable year.

A significant component of The Meditrust Companies' strategy is to grow
through acquisitions, and they believe that the current tax treatment of their
paired share structure provides them with certain advantages in making
acquisitions. If the legislation described below is enacted, then the income and
activities of Operating Company with respect to any property acquired by The
Meditrust Companies after March 26, 1998, for which there was no binding written
agreement, public announcement or SEC filing on or before March 26, 1998, will
be attributed to Meditrust for purposes of determining whether Meditrust
qualifies as a REIT under the Code. This proposed

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<PAGE>

legislation would effectively limit the advantages of The Meditrust Companies'
paired share structure to their existing properties and could make it more
difficult for them to make acquisitions in the future.

The tax rules relating to paired share REITs are the subject of intense
scrutiny by the Treasury Department and Congress. On February 2, 1998, the
Treasury Department released its Tax Proposals explaining the revenue proposals
included in the Clinton Administration's fiscal 1999 budget. The Tax Proposals,
among other things, include a freeze on the grandfathered status of paired share
REITs such as The Meditrust Companies. Under this proposal, Meditrust and
Operating Company would be treated as one entity with respect to properties
acquired on or after the date of the first Congressional committee action with
respect to such proposal and with respect to activities or services relating to
such properties that are undertaken or performed by one of the paired entities
on or after such date. The Tax Proposals also would prohibit REITs from holding
stock possessing more than 10% (and less than 100%) of the vote or value of all
classes of stock of any corporation and impose a potentially prohibitive tax on
REITs that acquire regular "C" corporations in reorganization transactions.
Restructuring the operations of Meditrust and Operating Company to comply with
the rules contemplated by the Tax Proposals could cause The Meditrust Companies
to incur substantial tax liabilities, "unpair" the stock of The Meditrust
Companies or otherwise adversely affect The Meditrust Companies and could
prevent Meditrust from growing as originally intended at the time of the merger
with Santa Anita Realty.

On March 26, 1998, Representative William Archer, Chairman of the House
Ways and Means Committee, and Senator William V. Roth, Jr., Chairman of the
Senate Finance Committee, introduced legislation similar to the Tax Proposals to
limit the "grandfathering" rule. Under the proposed legislation, the
anti-pairing rules provided in the Code would apply to real property interests
acquired or substantially improved after March 26, 1998 by The Meditrust
Companies, or a subsidiary or partnership in which a ten percent or greater
interest is owned by The Meditrust Companies (collectively, the "REIT Group"),
unless (1) the real property interests are acquired pursuant to a written
agreement that was binding on March 26, 1998 and at all times thereafter or (2)
the acquisition of such real property interests was described in a public
announcement or in a filing with the SEC on or before March 26, 1998. On May 7,
1998, the Senate unanimously passed The Internal Revenue Service Restructuring
and Reform Bill of 1998 (the "Bill"), which contains the anti-pairing
legislation described above. Moreover, the Bill provides that any property
acquired after March 26, 1998 by any company that is acquired by a paired share
REIT, other than property acquired pursuant to a written agreement that was
binding on March 26, 1998, would be subject to the anti-pairing rules.

Under this legislation as currently proposed, the properties held on March
26, 1998, by La Quinta and Cobblestone, which would be acquired pursuant to
Meditrust's proposed mergers with such companies, would not be subject to these
anti-pairing rules. However, any property acquired by either La Quinta or
Cobblestone after March 26, 1998, other than property acquired pursuant to a
written agreement that was binding on March 26, 1998, would be subject to the
anti-pairing rules. Moreover, we cannot assure you that this legislation will be
adopted in its current form or that the properties to be acquired from La Quinta
and Cobblestone or other properties of The Meditrust Companies will not become
subject to the anti-pairing rules of the Code in the future. In such a case,
Operating Company (including corporate subsidiaries of Meditrust that are
controlled by Operating Company) may not be able to operate the hotels and golf
courses to be acquired by Meditrust in such mergers in the manner currently
contemplated without disqualifying Meditrust as a REIT. Such a limitation would
have a material adverse effect on The Meditrust Companies, including their
results of operation, financial condition and prospects.

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<PAGE>

Potential Reallocation of Income. Due to the paired-share structure,
Meditrust, 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. Meditrust and Operating Company
believe that all material transactions between them have been and will continue
to be negotiated and structured with the intention of achieving an arm's-length
result. Accordingly, the potential application of Section 482 of the Code should
not have a material effect on Meditrust or 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.

Built-In Gain Tax. As a result of the La Quinta and Cobblestone mergers
being consummated, if Meditrust recognizes gain on the disposition of an asset
acquired from Cobblestone or La Quinta during the ten-year period beginning at
the date the mergers are consummated, then, to the extent of the asset's
"built-in gain" (i.e., the excess of the fair market value of such asset at the
date that the mergers were consummated over its then tax basis), Meditrust will
be subject to tax on such gain at the highest regular corporate rate applicable,
pursuant to Treasury Regulations not yet promulgated. Meditrust would have to
distribute 95% of the excess of the amount of recognized built-in gain over the
amount of tax paid in order to maintain its qualification as a REIT. The
foregoing assumes that Meditrust makes an election pursuant to IRS Notice 88-19
with respect to the mergers and that the availability or nature of such election
is not modified as proposed in the Tax Proposals. The Tax Proposals propose to
require that, effective for transactions occurring after December 31, 1998,
built-in gain inherent in the assets of a "C" corporation be recognized upon the
merger of a REIT with a "C" corporation. Meditrust will make the election
pursuant to IRS Notice 88-19 if such election is available.

Operational Limitations Imposed by the REIT Requirements. Operating income
derived from health care related facilities, hotels, golf courses, a racetrack
or similar operating businesses does not constitute qualifying income under the
REIT requirements. Accordingly, all of Meditrust's facilities have been leased
(rather than operated by Meditrust), and Meditrust will continue to lease such
facilities to Operating Company or other third parties after the La Quinta
Merger and the Cobblestone Merger. In addition, the hotels and golf courses
acquired in such transactions also will be leased to Operating Company. Rent
derived from all such leases will be qualifying income under the REIT
requirements, provided several requirements are satisfied.

Payments under a lease will not constitute qualifying income for purposes
of the REIT requirements if Meditrust owns, directly or indirectly, 10% or more
of the ownership interests in the relevant lessee. Constructive ownership rules
apply, such that, for instance, Meditrust is deemed to own the assets of
stockholders who own 10% or more in value of the stock of Meditrust. The by-laws
of Meditrust and Operating Company are therefore designed to prevent a
stockholder of Meditrust from owning Paired Shares that would cause Meditrust to
own, actually or constructively, 10% or more of the ownership interests in a
lessee (including the Operating Company). Thus, Meditrust 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 all direct and indirect transfers of Paired Shares, and
because the by-law provisions referred to above may not be effective, no
absolute assurance can be given that such transfers, or other events of which
Meditrust has no knowledge, will not cause Meditrust 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
impose a number of other restrictions on the operations of Meditrust. 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) generally is subject to a 100% tax.

Taxation of Meditrust. As a REIT, Meditrust is subject to Federal corporate
income tax on its taxable income, which is computed taking into account a
deduction for dividends paid and certain other special rules. Thus, if Meditrust
does not distribute all its net capital gains or distributes more than 95% but
less than 100% of its other

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<PAGE>

REIT Income, Meditrust will be subject to Federal corporate income tax
(including any applicable alternative minimum tax) on the undistributed portion
of such income (in the case of capital gains taxes paid by the REIT, each
Meditrust shareholder shall be entitled to a tax credit based on the amount of
such taxes). Such undistributed income also may be subject to the 4% excise tax
mentioned earlier. Meditrust expects to distribute all its income on a current
basis so that it will not incur any Federal income or excise tax (although it
may incur some amount of state and local tax in jurisdictions whose tax laws do
not conform to the Federal income tax treatment of REITs).

Federal Income Taxation of Operating Company and Non Controlled
Subsidiaries. As a "C" corporation under the Code, Operating Company will be
subject to Federal corporate income tax on its taxable income. Any income of
Operating Company, net of all taxes, will be available for retention in
Operating Company's business or for distribution to shareholders as dividends.
However, unlike Meditrust, there is no tax law 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.

In addition, any corporate subsidiaries of Meditrust that are not wholly
owned by it will also be subject to Federal income tax in the same manner as
Operating Company. Meditrust currently has one such corporate subsidiary, and it
is expected that one or more additional such corporate subsidiaries will be
formed in connection with the La Quinta Merger.

Federal Income Taxation of Holders of Paired Shares

Separate Taxation of Each Type of Share. Notwithstanding that the Paired
Shares may only be transferred as a unit, holders of the Paired Shares will be
treated for U.S. federal income tax purposes as holding equal numbers of shares
of Meditrust 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 Meditrust
Common Stock and each share of Operating Common Stock contained within each
Paired Share. The tax basis and holding period for each share of Meditrust
Common Stock and each share of Operating Common Stock also must be determined
separately. Upon a taxable sale of a Paired Share, the amount realized should be
allocated between the Meditrust Common Stock and the Operating 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 Meditrust qualifies as a REIT, distributions made to Meditrust'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. Distributions
that are designated as capital gain dividends will be taxed as capital gains (to
the extent they do not exceed Meditrust's actual net capital gain for the
taxable year) without regard to the period for which the stockholder has held
Meditrust Common Stock. Distributions in excess of current and accumulated
earnings and profits will not be taxable to a stockholder to the extent that
they did not exceed the adjusted basis of the stockholder's Meditrust 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 Meditrust Common Stock,
such distributions will be included in income as capital gain. In addition, any
distribution declared by Meditrust 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 Meditrust and received by the stockholder on
December 31 of such year, provided that the distribution is actually paid by
Meditrust during January of the following calendar year.

Distributions on Operating Common Stock from Operating Company up to the
amount of Operating Company's current or accumulated earnings and profits 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

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<PAGE>

limitations). Distributions in excess of 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 tax basis of the holder's Operating Common
Stock, but rather will reduce the adjusted tax basis of such Operating Common
Stock. To the extent that such distributions exceed the adjusted basis of the
U.S. Stockholder's Operating Common Stock, they will be included in income as
capital gain.

Meditrust may elect to retain and pay income tax on net long-term capital
gains recognized during any taxable year. If Meditrust so elects its
stockholders will include in income as capital gain their proportionate share of
such portion of its long-term capital gains as Meditrust may designate. A U.S.
Stockholder will be deemed to have paid its share of the tax paid by Meditrust
which will be credited or refunded to the U.S. Stockholder. The U.S.
Stockholder's tax basis in its shares of Meditrust Common Stock will be
increased by the amount of undistributed capital gains (less the capital gains
tax paid by Meditrust) included in the stockholder's income.

Taxable distributions from Meditrust or Operating Company and gain or loss
from the disposition of shares of Meditrust and Operating Common Stock will not
be treated as passive activity income and, therefore, stockholders generally
will not be 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 Meditrust
or Operating Company generally will be treated as investment income for purposes
of the investment interest deduction limitations. Capital gains 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 tax basis or any deemed
capital gain distributions to a Meditrust stockholder on account of Meditrust's
retained capital gains, will be treated as investment income for purposes of the
investment interest deduction limitations only if and to the extent the U.S.
Stockholder so elects, in which case such capital gains will be taxed at
ordinary income rates to the extent of the election. Meditrust and Operating
Company will notify U.S. 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 Meditrust) capital gain.
U.S. Stockholders may not include in their individual income tax returns any net
operating losses or capital losses of Meditrust or of Operating Company.

Taxation of U.S. Stockholders on the Disposition of Paired Shares. In
general, and assuming the U.S. Stockholder has the same holding period for
Meditrust Common Stock and Operating Common Stock, any gain or loss realized
upon a taxable disposition of Paired Shares by a U.S. Stockholder will be
treated as capital gain or loss. In addition, any loss upon a sale or exchange
of Meditrust Common Stock by a U.S. 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 Meditrust or
undistributed capital gains required to be treated by such stockholder as
long-term capital gain. However, the IRS has indicated in a recent notice that
it is examining the proper tax treatment of a long-term capital loss upon a sale
or exchange of corporation capital stock by a U.S. shareholder who has held the
stock for less than six months. 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.

The Taxpayer Relief Act of 1997 (the "Relief Act") altered 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 investments for more than 12
months but not more than 18 months may be taxed at a maximum 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. Gain or loss from the disposition of assets
held for less than 12 months is short-term capital gain or loss. 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 Meditrust. To date regulations have not
yet been prescribed, but the IRS has issued a notice describing the principles
which will be reflected in the Regulations. The notice provides that a REIT may
designate (subject to certain limits) whether a capital gain dividend is taxable
to U.S. shareholders (other than corporations) as a 20% rate capital gain
distribution (for capital gains with respect to capital assets held by the REIT
for more than 18 months), a 28% rate gain distribution with respect to capital
assets held by the REIT for more than one year but

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<PAGE>

not more than 18 months), or a Section 1250 gain distribution taxed at a 25%
rate (for a portion of the gain recognized by the REIT with respect to
dispositions of certain real property held for more than 18 months, equal to the
amount of all prior depreciation deductions not otherwise required to be taxed
as ordinary depreciation recapture income). This designation will apply to
distributed and undistributed capital gain dividends. 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 tax rate or holding period
for corporations under the Relief Act.

Information Reporting Requirements and Backup Withholding. Meditrust and
Operating Company will 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 correct 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 Meditrust and
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, Meditrust may be required to withhold a portion of capital gain
distributions to any stockholders who fail to certify their non-foreign status
to Meditrust.

The Treasury Department recently issued new regulations (the "New
Regulations") which make certain modifications to the withholding, backup
withholding and information reporting rules described above. The New Regulations
attempt to unify certification requirements and modify reliance standards. The
New Regulations will generally be effective for payments made after December 31,
1999, subject to certain transition rules. Prospective investors are urged to
consult their own tax advisors regarding the New Regulations.

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 Meditrust to Exempt Organizations generally will not
constitute UBTI, nor will dividends paid by Operating Company generally
constitute UBTI. However, if an Exempt Organization finances its acquisition of
Paired Shares with debt, a portion of its income from Meditrust and 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 Meditrust and Operating
Company as UBTI.

State and Local Taxation. The Meditrust 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 Meditrust
Companies and their stockholders should consult their own tax advisers regarding
the effect of state and local tax laws on the ownership of Paired Shares.

Investors are urged to consult their own tax advisors with respect to the
appropriateness of an investment in the Paired 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 in Meditrust and Operating Company including the possibility of
U.S. income tax withholding on distributions.

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SELLING STOCKHOLDERS

The following table sets forth the names of the Selling Stockholders, the
estimated number of Paired Shares to be owned beneficially by each of them as of
the closing of the Cobblestone Merger and the estimated number of Shares which
may be offered by each of them pursuant to this Prospectus. See footnote(1) to
the table.

<TABLE>
<CAPTION>
Shares Beneficially
Owned Prior to Shares Beneficially
Offering and Being Owned If All
Selling Stockholders Registered for Sale(1) Shares are Sold(1)
-------------------- ----------------------- --------------------
Number Number Percent*
----------------------- -------- ---------
<S> <C> <C> <C>
Brentwood Golf Partners, L.P. ........................................ 5,313,678 -- --
The Northwestern Mutual Life Insurance Company ....................... 573,621 -- --
James A. Husband, Jr. ................................................ 542,289 -- --
Cede & Co. ........................................................... 333,376 -- --
Wilmington Interstate Corporation .................................... 327,784 -- --
BankAmerica Investment Corporation ................................... 160,650 -- --
FSC Corp. ............................................................ 111,472 -- --
Steven L. Holmes ..................................................... 99,129 -- --
Pacific Enterprises Golf Partners, L.P. .............................. 85,364 -- --
Henry L. Hillman, Elsie Hilliard Hillman and
C.G. Grefenstette, Trustees of the Henry L. Hillman Trust
U/A/T dated November 18, 1985 ....................................... 73,743 -- --
Venhill Limited Partnership .......................................... 73,743 -- --
Joseph L. Champ ...................................................... 70,470 -- --
SSB Investments, Inc. ................................................ 55,763 -- --
Gary Dee ............................................................. 49,332 -- --
John M. Sullivan ..................................................... 42,215 -- --
Norman Goodmanson .................................................... 36,505 -- --
Oak Leaf Partners .................................................... 32,647 -- --
Andrew Crosson ....................................................... 26,077 -- --
C.G. Grefenstette and Thomas G. Bigley, Trustees U/A/T dated
8/28/68 for Henry Lea Hillman, Jr. .................................. 24,612 -- --
C.G. Grefenstette and Thomas G. Bigley, Trustees U/A/T dated
8/28/68 for William Talbott Hillman ................................. 24,612 -- --
C.G. Grefenstette and Thomas G. Bigley, Trustees U/A/T dated
8/28/68 for Juliet Lea Hillman ...................................... 24,566 -- --
C.G. Grefenstette and Thomas G. Bigley, Trustees U/A/T dated
8/28/68 for Audrey Hilliard Hillman ................................. 24,566 -- --
Paul Lewis Davies III ................................................ 23,477 -- --
Robert West .......................................................... 18,793 -- --
Martin R. Reid, IRA R/O Oppenheimer & Co., Inc. as custodian ......... 16,410 -- --
James T. Bergmark .................................................... 11,746 -- --
Martin R. Reid ....................................................... 9,397 -- --
Balboa Park Management Co., Inc. ..................................... 7,378 -- --
George M. Meaney ..................................................... 6,585 -- --
---------
TOTAL ................................................................ 8,200,000
</TABLE>

- ----------------
* Less than one percent.

(1) The number of Paired Shares indicated as beneficially owned by each of the
Selling Stockholders is an estimate based on, among other factors, the
assumption that the Average Closing Price of the Paired Shares prior to
the closing date of the Cobblestone Merger will equal $28.1875 per Paired
Share, which was the closing price of the Paired Shares on the NYSE on May
22, 1998. Such number is subject to adjustment as described in the
Cobblestone merger agreement and upon closing of the Cobblestone Merger
could be materially more or less than such estimate depending upon, among
other factors, the Average Closing Price of the Paired Shares prior to the
closing date of the Cobblestone Merger. The actual number of Shares issued
to the Selling Stockholders upon consummation of the Cobblestone Merger
shall be specified in a prospectus supplement to this Prospectus.

33
<PAGE>

PLAN OF DISTRIBUTION

The Meditrust Companies have been advised that the Selling Stockholders or
their transferees may sell the Shares from time to time after the closing of the
Cobblestone Merger in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time of
sale or at negotiated prices. The sale of the Shares may be effected in
transactions (which may involve cross or block trades) (i) on the NYSE or any
other national securities exchange or quotation service on which the Shares may
be listed or quoted at the time of sale, (ii) in the over-the-counter market,
(iii) in transactions otherwise than on such exchanges or in the
over-the-counter market, (iv) through the writing of options or (v) by any other
legally available means. The Shares may be sold directly 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 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).

Certain persons who sell the Shares covered by this Prospectus, and any
broker or dealer to or through whom any such person shall sell such securities,
may be deemed to be underwriters within the meaning of the Securities Act with
respect to the sale of such securities, 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.

At the time a particular offering of Shares is made, a prospectus
supplement, if required, will be distributed which will set forth the specific
amount of Shares being offered, the name of the selling stockholders and the
terms of the offering, including the name or names of any underwriters,
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers and
any other material information with respect to the plan of distribution not
previously disclosed.

Pursuant to the Cobblestone merger agreement, all expenses of the
registration of the Shares will be paid by The Meditrust Companies, including,
without limitation, Commission filing fees and expenses of compliance with state
securities or "blue sky" laws; provided, however, that the Selling Stockholders
will pay all underwriting discounts, selling commissions and related fees, if
any.

The Meditrust Companies have agreed to maintain the effectiveness of the
Registration Statement until the earlier of (i) one year from the closing of the
Cobblestone Merger and (ii) the date that all of the Shares covered by the
Registration Statement have been sold pursuant to the Registration Statement.

The Meditrust 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 Cravath, Swaine & Moore, New York, New York. In addition, Nutter,
McClennen & Fish, LLP, Boston, Massachusetts, will pass on certain Federal
income tax matters relating to The Meditrust 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. Paul R. Eklund, also a
partner in the law firm Nutter, McClennen & Fish, LLP, currently serves as
Assistant Secretary of Meditrust. Nutter, McClennen and Fish, LLP, serves as
counsel to The Meditrust Companies, and has rendered a legal opinion with
respect to certain Federal income tax matters filed as a part of the
Registration Statement.

34
<PAGE>

EXPERTS

The combined and consolidated financial statements of Meditrust Corporation
and Meditrust Operating Company, and the consolidated financial statements of
Meditrust Corporation as of December 31, 1997 and 1996, and for the years ended
December 31, 1997, 1996 and 1995, and the consolidated financial statements of
Meditrust Operating Company as of December 31, 1997 and for the initial period
ended December 31, 1997 incorporated by reference in this Registration Statement
on Form S-3 have been audited by Coopers & Lybrand L.L.P., independent
accountants, and are included herein in reliance upon the authority of such firm
as experts in accounting and auditing.

The combined balance sheets of La Quinta as of December 31, 1997 and 1996,
and the related combined statements of operations, shareholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1997,
incorporated herein by reference to The Meditrust Companies' Joint Current
Report on Form 8-K, event date March 31, 1998, have been audited by KPMG Peat
Marwick LLP, independent auditors as set forth in their report thereon included
therein and incorporated herein by reference and have been so incorporated
herein in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

The consolidated financial statements of Cobblestone Holdings, Inc. for the
three fiscal years ended September 30, 1997, incorporated herein by reference
from Meditrust Corporation's and Meditrust Operating Company's Joint Current
Report on Form 8-K, dated May 13, 1998, have been audited by Ernst & Young LLP,
indepedent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance on such report given upon the
authority of such firm as experts in accounting and auditing.

35
<PAGE>

================================================================================
No person has been authorized in connection with this offering to give any
information or to make any representations, other than those contained or
incorporated in this Prospectus Supplement or the accompanying Prospectus and,
if given or made, such information or representations must not be relied upon
as having been authorized by The Meditrust Companies or any other person. This
Prospectus Supplement and the accompanying Prospectus do not constitute an
offer to sell, or solicitation of an offer to buy, any of the Shares to any
person or by anyone in any jurisdiction in which it is unlawful to make such
offer or solicitation. Neither the delivery of this Prospectus Supplement or
the accompanying Prospectus nor any sale made hereunder at any time shall imply
that the information contained herein is correct as of any time subsequent to
its date.

-------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
-----
Prospectus Supplement

<S> <C>
Selling Stockholders .............................. S-2
Plan of Distribution .............................. S-6
Legal Matters ..................................... S-6
Interests of Named Experts and Counsel ............ S-6

Prospectus

Available Information ............................. 2
Incorporation of Certain Documents by
Reference ...................................... 3
Risk Factors ...................................... 4
The Meditrust Companies ........................... 20
Description of Capital Stock ...................... 22
Certain Federal Income Tax Considerations ......... 24
Selling Stockholders .............................. 33
Plan of Distribution .............................. 34
Legal Matters ..................................... 34
Interests of Named Experts and Counsel ............ 34
Experts ........................................... 35
</TABLE>

================================================================================

8,177,300 Shares

The Meditrust Companies

MEDITRUST CORPORATION
MEDITRUST OPERATING COMPANY

----------------------------------------

P R O S P E C T U S S U P P L E M E N T

----------------------------------------

June 24, 1998

================================================================================