-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KX3A2sV+woMkLkfZMIEAEziTTIP81x3DgmRguRXOnN5SxALx8+Lwm8VC4yDu2PVn jIt8HVNpbWFIg0Xb/hgjEg== 0001029869-98-000002.txt : 19980106 0001029869-98-000002.hdr.sgml : 19980106 ACCESSION NUMBER: 0001029869-98-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980104 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980105 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDITRUST OPERATING CO CENTRAL INDEX KEY: 0000313749 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-RACING, INCLUDING TRACK OPERATION [7948] IRS NUMBER: 953419438 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08132 FILM NUMBER: 98501084 BUSINESS ADDRESS: STREET 1: 197 FIRST AVE STREET 2: STE 300 CITY: NEEDHAM STATE: MA ZIP: 02194 BUSINESS PHONE: 7814538062 MAIL ADDRESS: STREET 1: MEDITRUST OPERATING CO STREET 2: 197 FIRST AVENUE SUITE 100 CITY: NEEDHAM STATE: CA ZIP: 91066-0808 FORMER COMPANY: FORMER CONFORMED NAME: SANTA ANITA OPERATING CO DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDITRUST CORP CENTRAL INDEX KEY: 0000314661 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-RACING, INCLUDING TRACK OPERATION [7948] IRS NUMBER: 953520818 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-08131 FILM NUMBER: 98501085 BUSINESS ADDRESS: STREET 1: MEDITRUST CORP STREET 2: 197 FIRST AVE STE 300 CITY: NEEDHAM STATE: MA ZIP: 02194 BUSINESS PHONE: 7814336000 MAIL ADDRESS: STREET 1: MEDITRUST CORP STREET 2: 197 FIRST AVENUE SUITE 300 CITY: NEEDHAM STATE: MA ZIP: 02194 FORMER COMPANY: FORMER CONFORMED NAME: SANTA ANITA REALTY ENTERPRISES INC DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): January 4, 1998 MEDITRUST CORPORATION (Exact Name of Registrant as specified in its charter) Delaware 95-3520818 (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation) Number) Identification No.) 197 First Avenue, Suite 300, Needham, MA 02194 (Address of principal executive offices and zip code) (781) 433-6000 (Registrant's telephone number, including area code) MEDITRUST OPERATING COMPANY (Exact Name of Registrant as specified in its charter) Delaware 96-3419438 (State or other jurisdiction (Commission File (I.R.S. Employer of incorporation) Number) Identification No.) 197 First Avenue, Suite 100, Needham, MA 02194 (Address of principal executive offices and zip code) (781) 453-8062 (Registrant's telephone number, including area code) Item 5. Other Events - ------- ------------ On January 4, 1998, Meditrust Corporation and Meditrust Operating Company issued the press release attached as Exhibit 99.1 to this Current Report on Form 8-K. Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits - ------- ----------------------------------------------------------------- (c) Exhibits Exhibit No. Description - ----------- ----------- 99.1 Press release announcing the execution of a definitive agreement pursuant to which La Quinta Inns, Inc. will, subject to certain conditions, merge into Meditrust Corporation. 99.2 The Meditrust Companies Investor Presentation slides dated January 1998 relating to The Meditrust Companies and the acquisition of La Quinta Inns, Inc. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: January 5, 1998 MEDITRUST CORPORATION /s/ David F. Benson ------------------------------- By: David F. Benson Its: President MEDITRUST OPERATING COMPANY /s/ Abraham D. Gosman ------------------------------- By: Abraham D. Gosman Its: Chief Executive Officer 3 Exhibit Index ------------- Exhibit No. Description - ----------- ----------- 99.1 Press release announcing the execution of a definitive agreement pursuant to which La Quinta Inns, Inc. will, subject to certain conditions, merge into Meditrust Corporation. 99.2 The Meditrust Companies Investor Presentation slides dated January 1998 relating to The Meditrust Companies and the acquisition of La Quinta Inns, Inc. EX-99.B1 2 PRESS RELEASE ANNOUNCEMENT EXHIBIT 99.1 THE BOARDS OF DIRECTORS OF THE MEDITRUST COMPANIES UNANIMOUSLY AGREE TO ACQUIRE LA QUINTA INNS FOR $3.0 BILLION Transaction Expected To Be 15% Accretive to Meditrust FFO --------------------- Needham, MA and San Antonio, TX (January 4, 1998) - The Meditrust Companies ("Meditrust") (NYSE: MT) and La Quinta Inns, Inc. ("La Quinta") (NYSE: LQI) announced today that they have signed a definitive agreement providing for Meditrust Corporation to acquire La Quinta by means of a merger of the two companies. The total consideration for the transaction will be $26.00 per share, in a combination of newly issued shares in Meditrust and cash, subject to certain adjustments. Meditrust will also assume approximately $900 million in outstanding La Quinta debt. The total transaction is valued at approximately $3.0 billion. Upon completion of the transaction, The Meditrust Companies will have a total market capitalization of approximately $7.5 billion. The transaction is expected to be approximately 15% accretive to Meditrust's funds from operations ("FFO") per share for the first twelve months of combined operations and is expected to contribute significantly to the growth of the combined entity in future years. Meditrust intends to maintain its historical record of quarterly increases in shareholder dividends. The transaction will be accounted for as a purchase, and is expected to close in the second quarter of 1998. 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 midprice segment without food and beverage facilities, and (ii) La Quinta Inn & Suites, a new concept positioned at the upper end of the midprice segment without food and beverage facilities. La Quinta currently owns and operates 234 Inns and 36 Inn & Suites with a total of approximately 35,000 rooms. La Quinta's hotels are located in 28 states with strong market positions in numerous southern and western states. - more - -2- Abraham D. Gosman, chairman of the board of directors of The Meditrust Companies, said, "Meditrust is off and running. The acquisition of La Quinta is consistent with our stated strategy to make accretive acquisitions of growth companies, in growth industries, with strong management teams, that can become consolidators in their industries. We intend to capitalize on these opportunities as they arise. This acquisition represents a platform for a lodging and leisure sector within Meditrust." Mr. Gosman continued, "La Quinta's growth plan is to have over 100 Inn & Suites hotels with approximately 13,500 additional rooms to be opened by the end of 1999. This program will increase the availability of total rooms by approximately 45% and will result in Inn & Suites representing over 30% of total La Quinta brand rooms by the end of 1999. With the successful completion of La Quinta's comprehensive chain-wide re-imaging program and execution of its Gold Medal(R) Rooms Program - the complete renovation of over 30,000 La Quinta Inn rooms - La Quinta has achieved its goal of creating the most consistent, high-quality lodging chain in the midprice segment of the industry. Over the last three years, La Quinta management and employees have transformed the company into one of the premier brands in its segment. La Quinta's employees and management will play a critical role in the future of our combined company." Gary L. Mead, president and chief executive officer of La Quinta Inns, Inc., said, "This transaction allows La Quinta shareholders to convert their shares into Meditrust shares on favorable terms and to participate in the upside potential of the combined company. We feel that the strengths of the La Quinta organization will add significantly to Meditrust's long-term growth strategy. Additionally, the combined company will have greater financial flexibility than La Quinta would have on a stand-alone basis. We are proud that we are able to provide our shareholders with such a strong partner. Meditrust has had strong financial performance - an average annual total return of 22% from inception through 1996 - and 47 consecutive quarterly dividend increases." Ezzat S. Coutry, chief operating officer of La Quinta, said, "La Quinta is the largest owner and operator of midprice hotels without food and beverage facilities - a segment that is less sensitive to economic cycles than others within the lodging industry. We have a proven portfolio of properties, a well-recognized brand and the management expertise to create value for all shareholders. La Quinta today has one of the highest customer satisfaction ratings in the lodging industry. We also have a highly rated frequent travelers program, The Returns(R) Club, with over 300,000 members, approximately 10% of whom spend more than 30 nights a year at a La Quinta property. Combining Meditrust's financial strength and ability to access the capital markets coupled with La Quinta's operating and development experience will enhance La Quinta's ability to create lasting brand value for the future." - more - - 3 - Abraham Gosman will continue to serve as chairman of the boards of directors of The Meditrust Companies. Upon completion of the merger agreement, Gary Mead, currently president and chief executive officer of La Quinta will step aside to allow Ezzat Coutry, currently chief operating officer of La Quinta, to become president and chief executive officer of La Quinta. Prior to joining La Quinta in 1996, Mr. Coutry spent 20 years at Marriott International, Inc. where he held various senior operations management positions overseeing Marriott Hotels & Resorts, Courtyard, Residence Inn and Fairfield Inn brands. The rest of the La Quinta senior officers also plan to stay with the new organization. Under the terms of the Merger Agreement, La Quinta will merge with and into Meditrust Corporation. La Quinta shareholders will have the option to elect to receive, subject to the amount of aggregate cash payable being limited to approximately 25% of the total transaction consideration, either: (i) a combination of Meditrust stock and the special dividend distribution of earnings and profit referred to below, or (ii) cash. The stock consideration will be payable in Meditrust paired shares under an exchange ratio determined based on the average closing price of Meditrust's paired shares for 20 randomly determined trading days in a 30-day period ending the seventh day prior to La Quinta's shareholder meeting called to consider the merger, defined as the "Meeting Date Price." The Merger Agreement provides that La Quinta shareholders electing to receive cash will receive, subject to the maximum cash limitations, $26.00 per exchanged La Quinta share. The Merger Agreement also provides that La Quinta shareholders electing to receive stock consideration will receive $26.00 in value so long as the Meeting Date Price is between $34.20 and $41.80. The $26.00 in value will be comprised of: (i) paired shares and (ii) a special dividend distribution of La Quinta's earnings and profit. The special dividend distribution is expected to be declared immediately prior to the merger, payable to all Meditrust shareholders of record on a date to be determined by Meditrust between the 15th and the 45th day following the merger and payable within 15 days of such record date. Above and below the $34.20 and $41.80 Meditrust share values, the value received by La Quinta shareholders electing to receive stock consideration is subject to adjustment based on certain cap and collar mechanisms as described in the Merger Agreement. If the Meeting Date Price is below $30.40, La Quinta will have the right to terminate the Merger Agreement under certain circumstances, subject to a top-up right exercisable by Meditrust. If the Meeting Date Price is below $28.50, La Quinta will have the unilateral right to terminate the Merger Agreement. On January 2, 1998, the closing price of Meditrust's paired shares was $36.375. All La Quinta shareholders will have the right to elect cash consideration for each of their shares. In the event that cash to be paid both pursuant to cash elections in the merger and in the post-closing dividend distribution exceeds approximately 25% of the total transaction consideration, the cash merger consideration will be distributed pro rata among those shares submitted for cash and all other La Quinta shares will receive paired shares and the post-closing dividend distribution. - more - - 4 - The transaction is anticipated to be tax-free to La Quinta shareholders who receive only Meditrust paired shares, except to the extent of: (i) the value of the paired operating company of the paired shares, which is estimated at approximately 5% of the total value of the paired shares, and (ii) the special dividend distribution referred to above. Further, La Quinta shareholders who receive cash in the transaction (including the associated earnings and profit distribution) will be taxable to the extent of such cash, with the cash received as merger consideration generally treated as capital gains and the earnings and profit distribution treated as ordinary income. The transaction is conditioned, among other things, upon approval of a majority of Meditrust Corporation's and Meditrust Operating Company's outstanding shares, two-thirds of La Quinta's outstanding shares, and regulatory agencies. In the event that the merger agreement is terminated, under certain circumstances, including in order to allow La Quinta to pursue a superior proposal (as defined in the Merger Agreement), La Quinta will be required to pay Meditrust a break-up fee of $75 million. In a separate agreement, Gary Mead, Thomas M. Taylor & Co. and entities and individuals associated with certain members of the Bass family who own in the aggregate approximately 28% of La Quinta's shares have agreed, among other things, to vote their La Quinta shares in favor of the proposed transaction with Meditrust. The Merger Agreement has been unanimously approved by the boards of directors of Meditrust Corporation, Meditrust Operating Company and La Quinta. Salomon Smith Barney acted as financial advisor and provided a fairness opinion to The Meditrust Companies. Merrill Lynch & Co. Incorporated acted as financial advisor and provided a fairness opinion to La Quinta. La Quinta Inns, Inc. is the largest owner/operator of midpriced hotels in the United States, with 234 La Quinta Inns and 36 La Quinta Inn & Suites with a total of approximately 35,000 rooms. La Quinta Inns operate primarily in the midprice segment without food and beverage facilities and La Quinta Inns & Suites in a new concept positioned at the upper end of that segment. The Company has inns located in 28 states, concentrated in the southern and western states. The Meditrust Companies, a paired share real estate investment trust and the nation's largest health care real estate investment trust, with headquarters in Needham, Massachusetts, consists of Meditrust Corporation and Meditrust Operating Company. Meditrust has investments in over 500 health care facilities in 41 states with 38 different operators and has a total market capitalization in excess of $4.5 billion. ### Certain matters discussed within this press release may constitute forward-looking statements within the meaning of the federal securities laws. Although Meditrust and La Quinta believe the statements are based on reasonable assumptions, the companies can give no assurance that their expectations will be attained. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, general economic and real estate conditions, the availability of equity and debt financing for acquisitions and renovations, interest rates, competition for hotel services in a given market and other risks detailed from time to time in the filings of Meditrust Corporation, Meditrust Operating Company, and La Quinta with the Securities and Exchange Commission, including quarterly reports on Form 10-Q, reports on Form 8-K and annual reports on Form 10-K. EX-99.2 3 ADDITIONAL EXHIBITS Exhibit 99.2 [START: DESCRIPTION OF SLIDES] The Meditrust Companies Investor Presentation January 1998 Table of Contents 1 Transaction Overview and Rationale 2 Overview of Meditrust 3 Overview of La Quinta Appendix A Additional Meditrust Information B Additional La Quinta Information 2 The Meditrust Companies These slides may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and such statements are subject to risks and uncertainties. Any such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those in the forward-looking statements as a result of various factors, including general economic and real estate conditions, as well as additional risk factors contained in the companies' filings with the Federal Securities and Exchange Commission. 3 The Meditrust Companies Transaction Overview The Meditrust Companies Transaction Overview Summary: Merger of La Quinta into Meditrust Transaction Size: Equity value: $2,139 million Debt: $ 900 million -------------- Transaction value: $3,039 million Consideration: Total consideration valued at $26.00 per La Quinta share Share for share transaction with a cash election of up to $520 million - $6.75 per share if all shareholders elect cash Exchange ratio for stock component to be based on collar mechanism and average Meditrust stock price during agreed upon pricing period prior to closing Special post-merger dividend to distribute La Quinta's accumulated earnings and profits to be included in the purchase price 5 The Meditrust Companies Transaction Overview (Cont'd) Shareholder Agreements: Principal shareholders representing 28% of La Quinta's share have agreed to vote in favor of the transaction Break Up Fee: $75 million, payable if La Quinta pursues an alternative transaction Management: Ezzat Coutry, with more than 20 years experience with Marriott prior to joining La Quinta in 1996 as COO, will become CEO of the La Quinta division with the La Quinta management team reporting to him 6 The Meditrust Companies Transaction Rationale La Quinta offers a strong operating platform to Meditrust: Wholly owned hotels, all recently developed or renovated High operating margins Market leadership in its sector Growth opportunities through geographic expansion Well established and recognized brand name La Quinta offers the following financial benefits to Meditrust: Significantly accretive in the first 12 months of combined operations La Quinta has proven to be less earnings sensitive in an economic downturn La Quinta's recent $270 million renovation program limits near term capital expenditure requirements Strong and growing cash flows 7 The Meditrust Companies Transaction Rationale (Cont'd) Combined company will be one of the largest publicly traded REITs with pro forma equity market and total market capitalization in excess of $5.2 and $7.5 billion, respectively Paired-share structure allows Meditrust to capture 100% of hotel economics as owner/operator of hotel properties and owner of La Quinta brand name Strong combined management team with extensive industry and capital raising experience 8 The Meditrust Companies Meditrust Selected Financial Data(1) [START: BAR CHARTS] (Figures in millions) Total Revenues Funds from Operations 1993 1994 1995 1996 1997E 1993 1994 1995 1996 1997E $150 $173 $209 $254 $299 $78 $96 $137 $179 $192 4 Yr CAGR: 18.7% 4 Yr CAGR: 25.4% [END: BAR CHARTS] (1) 1997 based on analyst estimates 9 The Meditrust Companies La Quinta Selected Financial Data(1) [START: BAR CHARTS] (Figures in millions) Revenues EBITDA 1993 1994 1995 1996 1997E 1993 1994 1995 1996 1997E $272 $362 $414 $443 $503 $104 $149 $186 $206 $240 4 Yr CAGR: 16.6% 4 Yr CAGR: 23.3% [END: BAR CHARTS] (1) 1997 based on analyst estimates 10 The Meditrust Companies Selected Income and Capitalization Information (Figures in millions)
1997E(1) 1997E(2) Meditrust La Quinta Meditrust La Quinta(3) Total Revenues $299 $503 Debt $1,399 $900 EBITDA 282 240 Equity Market Value $3,230 $2,139 FFO/Net Income to Common 192 81 Total Market Cap. $4,629 $3,039 FFO/Earnings Per Share $2.52 $1.01 Total Debt/Total 30% 30% Market Cap.
(1) Based on analyst estimates (2) Based on company estimates (3) Calculated at $26 purchase price 11 The Meditrust Companies Meditrust FFO Payout History Over the past five years Meditrust's FFO Payout has increased by 3.0% CAGR, while its dividend payout ratio has decreased from approximately 95% to 90% With the Santa Anita acquisition, Meditrust's projected FFO payout ratio for 1998 would have increased to approximately 100% With the La Quinta transaction, the pro forma 1998 payout ratio is estimated to be less than 90% [START: BAR CHART]
FFO Payout FFO Payout Ratio 1992 1993 1994 1995 1996 1997 1992 1993 1994 1995 1996 1997 $2.05 $2.11 $2.18 $2.25 $2.31 $2.38 95.44% 93.75% 92.05% 90.72% 89.81% 94.00%
12 The Meditrust Companies Meditrust Overview The Meditrust Companies Meditrust Overview One of four publicly traded paired share REITS Largest Healthcare REIT Increasing dividends for 47 consecutive quarters Total investment of $2.6 billion in 491 health care facilities in 41 states with 38 different operators as of September 30, 1997 $3.2 billion equity market capitalization as of December 31, 1997 with Santa Anita Estimated 1997 FFO per share of $2.52 25.4% FFO CAGR over past 4 years Reaffirmed investment grade credit rating from Moody's and Standard & Poors 14 The Meditrust Companies Organization Chart Paired Certificate Meditrust Meditrust REIT Operating Company Board of Directors Board of Directors Abraham D. Gosman, Chairman Abraham D. Gosman, Chairman President Chief Executive Officer David F. Benson Abraham D. Gosman Chief Sr. Vice Chief CEO CEO Operating President Financial Santa Anita La Quinta EVP Officer Corporate Officer Companies Acquisitions Michael F. Counsel Laurie T. William C. Ezzat S. (Open) Bushee Michael S. Gerber Baker Coutry Benjamin 15 The Meditrust Companies Meditrust Strategies Thoroughbred Inpatient Horse Racing Healthcare REIT Ancillary Consolidation Healthcare Meditrust Hospitality Golf Real Estate Retirement Development Communities 16 The Meditrust Companies La Quinta Overview The Meditrust Companies Company History 1968 Founded in San Antonio, Texas 1972 Initial public offering 1992 Assembled new management team led by Gary L. Mead, President and CEO, that restructured the business and consolidated the ownership of all the hotels 1994 First major renovation program (Image Enhancement Program) completed 1996 Commenced development and opening of first Inn and Suites Hotels 1997 Second major renovation program (Gold Medal Rooms Program) completed Inn and Suites product reaches 36 hotels with 26 additional properties under construction 18 The Meditrust Companies Company Profile Fully integrated lodging company focused on the midprice sector without food and beverage facilities La Quinta Inns La Quinta Inn & Suites 270 properties in 28 states with approximately 35,000 rooms by December 31, 1997 Estimated 1997 revenues over $500 million and EBITDA of $240 million EBITDA projected to increase in 1998 by approximately 20% First full marketing year for renovated Inns 36 Inn and Suites on line for whole year, with 29 to 34 new properties scheduled to open in 1998 New management systems recently put in place 19 The Meditrust Companies Competitive Strengths Ranked as one of the largest and most profitable lodging companies Market leadership Well recognized, established brand name High quality, recently developed or renovated hotels Geographically diverse, with room for expansion Successful development track record Strong and growing revenues and cash flows Strong management team with proven industry experience Ability to be consolidator in this sector Investment grade credit rating 20 The Meditrust Companies Strong Management Team (1) Indusry Name Position Experience Ezzat S. Coutry President and Chief Executive Officer 21 years Steven T. Schultz SVP - Development 20 years Stephen B. Hickey SVP - Marketing 25 years William S. McCalmont SVP and Chief Financial Officer 13 years John F. Schmutz VP, General Counsel and Secretary 18 years Average Industry Experience 19 Years (1) Post transaction closing 21 The Meditrust Companies Appendices The Meditrust Companies Additional Meditrust Information The Meditrust Companies Consistent Growth in Real Estate Investments [START: BAR CHART] ($ in Millions) - -------------------------------------------------------------------------------- 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997E - -------------------------------------------------------------------------------- $506 $672 $782 $889 $1,081 $1,288 $1,550 $1,855 $2,286 $2,786 - -------------------------------------------------------------------------------- 69% 33% 16% 14% 22% 19% 21% 20% 21% 22% - -------------------------------------------------------------------------------- [END: BAR CHART] 24 The Meditrust Companies Growth Strategy Elderly Care: The Spectrum of Health Care Delivery Options ------------- ----------- ------------- "no-go" "slow-go" "go-go" ------------- ----------- ------------- ------------- ----------- ------------- Traditional Geriatric Assisted Independent Nursing Living Living Home Facility ------------- ----------- ------------- Acuity Lower Higher Acuity 25 The Meditrust Companies Investments by Type of Facility [START: PIE CHART] As of September 30, 1997 Psychiatric; Alcohol and Substance Abuse (1%) Acute Care Hospital Campus (3%) Medical Office Buildings (7%) Rehab Services (10%) Retirement and Assisted Living (22%) Nursing Homes (57%) [END: PIE CHART] 26 The Meditrust Companies Investments by Operator [START: PIE CHART] As of September 30, 1997 Other Non Public (19%) Sun Healthcare* (15%) Other Public (13%)*: Alternative Living Services ARV Assisted Living Assisted Living Concepts Columbia Genesis HealthSouth Rehabilitation Karrington Health Mariner Multicare Sterling House Corporation Youth Services International Emeritus Corporation* (8%) Horizon/CMS* (5%) Springwood Associates (5%) Harborside* (4%) Health Asset Realty Trust (4%) Tenet* (3%) Integrated Health Services* (2%) Life Care Centers of America (22%) *Public Companies approximate 50% of total operator base [END: PIE CHART] 27 The Meditrust Companies Dividend Growth - 47 Consecutive Increases [START: LINE CHART] 1992 1993 1994 1995 1996 1997 $2.46 $2.54 $2.62 $2.70 $2.78 $2.86* *Analyst Projections prior to announcement of Santa Anita acquisition [END: LINE CHART] 28 The Meditrust Companies Average Annual Total Return [START: BAR CHART] Since Inception* Meditrust 22% S&P 16% NAREIT 10% *1985-1996 [END: BAR CHART] 29 The Meditrust Companies Additional La Quinta Information The Meditrust Companies High Quality, Recently Renovated Hotels Image Enhancement Program: Completed in 1994 Cost: $70 Million Brighter and more fully landscaped exteriors Improved signage and logo Full lobby renovation 5% occupancy increase after first year of program Gold Medal Rooms Program: Completed in 1997 Cost: $200 million Completely redesigned interiors for maximum functionality and superior appearance Enhanced entertainment system to rival upscale hotels Interior parallel of Image Enhancement Program Favorable impact expected for 1998 31 The Meditrust Companies Geographically Diverse Portfolio of Hotels* [MAP OF USA SHOWING LOCATIONS OF INNS AND INNS & SUITES] 36 Inn & Suites (4,592 rooms) 234 Inns (30,180 rooms) 270 Properties (34,772 rooms) *As of December 31, 1997 32 The Meditrust Companies Lodging Industry Overview The United States hotel industry has experienced dramatic growth and record profitability during the past five years Lodging industry profit has sharply rebounded from 1992 and is forecasted to remain strong Room revenues in the "mid price sector without food and beverage facilities" have recorded 16.3% CAGR over the period 1990 to 1996 - by far the fastest growing lodging sector La Quinta is the largest independent operator in the "midprice sector without food and beverage facilities" and the only operator to own and operate nearly 100% of its branded hotels [START: BAR CHART] U.S. Lodging Industry - Estimated Profitability ----------------------------------------------- 1992 1993 1994 1995 1996 1997 1998P 0.0 2.4 5.5 8.5 12.5 14.6 15.5 - 16.5 Source: Smith Travel Research [END: BAR CHART] 33 The Meditrust Companies Lodging Market Overview Total Industry Supply Data (as of October 1997): 3,532,761 Total Hotel Rooms [START: PIE CHART] Budget 16.4% Upper Upscale 16.6% Upscale 14.9% Midprice w/F&B 25.0% Midprice w/o F&B 9.7% Economy 17.4% Source: Data provided by Smith Travel Research [END: PIE CHART] 34 The Meditrust Companies Chain Supply & Profit Shares 1996 [START: BAR CHART] Upper Midprice Midprice Upscale Upscale with F&B w/o F&B Economy Budget Independent Supply 12.7% 7.3% 19.9% 7.9% 12.0% 6.9% 33.3% Profit 37.0% 15.7% 5.5% 9.0% 12.7% 1.9% 18.2% [END: BAR CHART] Statistics on Compound Annual Growth, 1990 - 1996: Demand 2.3% 5.5% 0.1% 11.3% 4.6% -1.2% -0.7% Supply 1.0% 3.7% -0.1% 10.8% 4.7% 0.9% -0.9% Rm Revenues 6.0% 9.3% 2.5% 16.3% 7.2% 1.2% 2.5% Source: Copyright 1997 Smith Travel Research 1996 Total room supply was 3.43 million rooms and profit $12.5 billion 35 The Meditrust Companies La Quinta Hotel Operating Statistics ADR $44.33 $46.25 $47.65 $51.07 $53.83 $56.86 RevPAR $29.08 $30.20 $33.40 $36.17 $37.06 $39.45 Occupancy 65.6% 65.3% 70.1% 70.8% 68.9% 69.4% - ------------------------------------------------------------------------ 1992 1993 1994 1995 1996 1997 Total Hotels in Operation 169 211 266 235 248 270 Total Rooms 21,700 27,000 29,100 30,000 32,000 34,900 36 The Meditrust Companies Profile of Lodging Sector Total Industry Supply Data (as of October 1997): 3,532,761 Total Hotel Rooms 2,400,961 Total Chain Controlled Rooms 1,131,800 Total Independent Rooms Midprice w/o F&B Avg. ADR: $59 Name # of Rooms Comfort Inn* 93,954 Hampton Inn* 75,854 Holiday Inn Express* 51,011 La Quinta 33,226 Comfort Suites* 11,895 Country Inn & Suites* 7,549 Drury Inn 7,351 Amerisuites 7,182 Shilo Inn 5,072 Amerihost 3,736 Other Chains 24,000 Independents 21,941 Total Segment 342,771 % of Industry 9.7% Total Chain Controlled 320,830 % of Industry 9.1% * Indicates predominantly franchised chains. Note: Data provided by Smith Travel Research Midprice breakdown F&B and w/o F&B based on Salomon Smith Barney Estimates and Independents allocated according to price point 37 The Meditrust Companies -----END PRIVACY-ENHANCED MESSAGE-----