-----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, E5eeMJ7EIoM/UcttBe1Z6ZrRME7Q2r7KzdHLoc2mF3MZcSfhWMELO1ckFLBnI0iU F5WvsqjZSbCpxe/QduEOmg== 0000950135-96-001296.txt : 19960304 0000950135-96-001296.hdr.sgml : 19960304 ACCESSION NUMBER: 0000950135-96-001296 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960301 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDITRUST CENTRAL INDEX KEY: 0000774350 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 046532031 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-09582 FILM NUMBER: 96530373 BUSINESS ADDRESS: STREET 1: 197 FIRST AVENUE CITY: NEEDHAM STATE: MA ZIP: 02194 BUSINESS PHONE: 6174336000 MAIL ADDRESS: STREET 1: 197 FIRST AVENUE CITY: NEEDHAM STATE: MA ZIP: 02194 10-K405 1 MEDITRUST 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Mark One) [X] Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] for the fiscal year ended December 31, 1995 or [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] for the transition period from to ------- ---------- Commission file number: 0-14022 MEDITRUST (Exact name of registrant as specified in its charter) Massachusetts 04-6532031 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 197 First Avenue, Needham Heights, MA. 02194-9127 - --------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code (617) 433-6000 -------------- Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered ------------------- ----------------------------------------- Shares of Beneficial Interest without par value New York Stock Exchange 9% Convertible Debentures due 2002 New York Stock Exchange 7% Convertible Debentures due 1998 New York Stock Exchange 7 1/2% Convertible Debentures due 2001 New York Stock Exchange 8.54% Convertible Debentures due 2000 New York Stock Exchange 8.56% Convertible Debentures due 2002 New York Stock Exchange Medium-Term Notes due from 1997 to 2015 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ------- ------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K X . ---- Aggregate market value of voting shares held by non-affiliates as of January 29, 1996: $1,801,322,400 Number of Shares of Beneficial Interest outstanding of registrant as of January 29, 1996: 51,283,200 The following documents are incorporated by reference into the indicated Part of this Form 10-K.
Document Part -------- ---- Definitive Proxy Statement for the May 8, 1996 Annual Meeting of Shareholders, to be filed pursuant to Regulation 14A III
2 PART I ITEM 1. BUSINESS GENERAL Unless otherwise specified, information regarding Meditrust's business is given as of December 31, 1995. Meditrust (the "Company"), a real estate investment trust organized on August 6, 1985, invests primarily in the health care industry in locations throughout the United States. The objective of the Company is to enable shareholders to participate in the investment in health care related facilities held primarily for the production of income to be distributed to shareholders. In meeting this objective, the Company invests in high quality facilities that are managed by experienced operators and achieves diversity in its property portfolio by sector of the health care industry, geographic location, operator and form of investment. The Company was organized to qualify, and intends to continue to operate, as a real estate investment trust in accordance with federal tax laws and regulations. So long as the Company so complies, with limited exceptions, the Company will not be taxed under federal income tax laws on that portion of its taxable income that it distributes to its shareholders. The Company has distributed, and intends to continue to distribute, substantially all of its real estate investment trust taxable income to shareholders. As of December 31, 1995, the Company had investments in 303 facilities, consisting of 247 long-term care facilities, 24 rehabilitation hospitals, 14 medical office buildings, 10 alcohol and substance abuse and psychiatric facilities, seven retirement and assisted living facilities, and one acute care hospital campus. Included in the 303 facilities are 17 properties under construction that are expected to be completed during the next three to 12 months. The Company's investments take the form of permanent mortgage loans, sale/leaseback transactions and development loans. The Company only enters into development loans if, upon completion of the facility, the Company's development loan is to be replaced by either a permanent mortgage loan from the Company or a sale/leaseback transaction with the Company. The Company's net increase in gross real estate investments totaled $305,000,000 during 1995 as a result of the Company entering into sale/ leaseback transactions and making permanent mortgage loans and development loans. Total investments were $1,855,000,000 at December 31, 1995. Sale/Leaseback Transactions. The Company acquired an acute care hospital campus located in Arizona, and five long-term care facilities located in Ohio and West Virginia for $88,700,000. The Company also provided $2,487,000 for additions to three facilities, and $3,000,000 for land at one facility that are currently owned by the Company. In addition, the Company received proceeds of $7,800,000 from the sale of a long-term care facility in Illinois. Permanent Mortgage Loans. During 1995, the Company provided permanent mortgage financing of $100,376,000 for six long-term care facilities located in Arizona, Massachusetts, Michigan, Tennessee and Washington, three medical office buildings in Florida and Tennessee, one assisted living facility in - 2 - 3 Michigan, two retirement living centers located in Nevada and Utah, two alcohol and substance abuse facilities and one psychiatric facility located in New York. The New York facilities were previously financed for $72,397,000 with a previous borrower. The previous borrower prepaid this loan with the proceeds from the sale to the Company of four long-term care facilities in Maryland, Massachusetts and New Jersey and one rehabilitation hospital in New Jersey. Also during 1995, the Company provided $51,840,000 in additional permanent mortgage financing secured by 18 long-term care facilities located in Kansas, Kentucky, Massachusetts, Missouri, Nevada, Pennsylvania, Tennessee, Texas, Washington and Wyoming, and two retirement facilities located in Nebraska and Wyoming. Other Transactions. During the year ended December 31, 1995 the Company received annual principal payments on real estate mortgages of $6,615,000 and received $43,232,000 in mortgage prepayments for seven long-term care facilities located in Connecticut, Massachusetts, Pennsylvania and West Virginia and one rehabilitation facility located in Nevada. Conversion of Development Loans to Permanent Mortgage Loans. During 1995, the Company provided ongoing development financing of $8,390,000, resulting in an aggregate funding of $36,046,000 for four long-term care facilities located in Connecticut and Massachusetts, which were converted to permanent mortgage loans. Development Loans. During 1995, the Company provided net construction financing of $98,556,000 for 10 long-term care facilities, 11 medical office buildings and one assisted living facility. Aggregate development funding as of December 31, 1995 was $119,884,000 and the Company was committed to provide additional financing of approximately $102,701,000 relating to six long-term care facilities, 10 medical office buildings, and one assisted living facility currently under construction and additions to permanent mortgages secured by five long-term care facilities. Financings. In March and April 1995, the Company completed the sale of 9,250,000 shares of beneficial interest without par value ("Shares"), at $30.125 per Share. The net proceeds to the Company from this offering were used to repay short-term borrowings and for investments in additional health care facilities. On July 26, 1995, the Company completed the sale of $125 million of 7.375% Notes due July 15, 2000 and $80 million of 7.6% Notes due July 15, 2001. The 7.375% Notes were priced at 99.82% to yield 7.418% and the 7.6% Notes were priced at 99.948% to yield 7.61%. The Company used the net proceeds to repay indebtedness. On July 31, 1995, the Company completed the sale of $43,334,000 of 8.54% Series A convertible senior notes due July 1, 2000 and $51,666,000 of 8.56% Series B convertible senior notes due July 1, 2002. These notes are convertible into Shares of beneficial interest of the Company at $32.625 per Share. The Company used the net proceeds from the offering to repay indebtedness. In July and August 1995, the Company prepaid senior unsecured notes and senior mortgage notes payable of $296,800,000 which were due between 1995 and 2001, with interest rates ranging from 10.00% to 10.86%. The transaction resulted in prepayment penalties and acceleration of unamortized debt costs totaling $33,454,000, which was an extraordinary item reflected as a loss from prepayment of debt on the Company's income statement for the year ended December 31, 1995. Net proceeds from the issuance of approximately $300 million of notes and convertible debentures with interest rates ranging - 3 - 4 from 7.375% to 8.56% were used for the prepayment. The Company will gain flexibility from the elimination of certain operational covenants contained in the agreements relating to prepaid indebtedness and benefit from lower interest rates and improved interest coverage ratios. On August 10, 1995, the Company commenced a Medium-Term Note program, offering on a continuing basis, notes due from nine months to 30 years from date of issue, as selected by the purchaser and agreed to by the Company at an aggregate initial public offering price not to exceed $200 million. During August and September $98,500,000 of these notes were issued with maturity dates ranging from August 16, 1999 to August 17, 2015, bearing interest at rates between 7.25% to 8.625%. The net proceeds were utilized to reduce the outstanding balance of the Company's unsecured credit facilities. In November 1995, the Company completed the sale of 1,000,000 Shares at $33.00 per Share exclusively to European investors. The net proceeds to the Company from this offering were used to repay short-term borrowings and for investments in additional health care facilities. During January 1996, through the date hereof, the Company issued unsecured notes in the aggregate principal amount of $40 million which mature between January 1997 and January 2006 and bear interest at annual rates ranging from 6.35% to 7.3%. The Company has a total of $230 million in unsecured credit facilities consisting of (i) unsecured revolving lines of credit expiring June 30, 1997 in the aggregate amount of $205 million bearing interest at the lender's prime rate or LIBOR plus 1.00%, and (ii) an unsecured short-term borrowing entered into on January 17, 1996, which expires in April 1996 in the amount of $25 million bearing interest at LIBOR plus 1.25%. A total of approximately $69 million was available under the Company's revolving lines of credit at January 29, 1996. The Company also has an 8% interest rate cap for $100 million of its unsecured facilites, which expires in January 1997. In February 1996, the Company completed the sale of 9,200,000 Shares at $34.00 per Share. The net proceeds to the Company from this offering were used to repay short-term borrowings and for investments in additional health care facilities. The Company may raise additional capital from public or private sources and invest in additional health care related facilities. - 4 - 5 INVESTMENT AND OTHER POLICIES GENERAL The Company invests in income-producing health care related facilities which may include long-term care facilities, rehabilitation hospitals, retirement and assisted living facilities, medical office buildings, alcohol and substance abuse treatment facilities, psychiatric hospitals, and other health care related facilities. These investments are made primarily for the production of income. Because the Company invests in health care related facilities, the Company is not in a position to diversify its investment portfolio to include assets selected to reduce the risks associated with investment in improved real estate in a single industry. However, the Company intends to continue to diversify its portfolio by broadening its geographic base, providing financing to more operators, diversifying the type of health care facilities in its portfolio and diversifying the types of financing methods provided. In evaluating potential investments, the Company considers such factors as: (1) the current and anticipated cash flow and its adequacy to meet operational needs and other obligations and to provide a competitive market return on equity to the Company's shareholders; (2) the geographic area, type of property and demographic profile; (3) the location, construction quality, condition and design of the property; (4) the potential for capital appreciation, if any; (5) the growth and regulatory environment of the communities in which the properties are located; (6) occupancy and demand for similar health care facilities in the same or nearby communities; (7) an adequate mix of private and governmental-sponsored patients; (8) potential alternative uses of the facilities; and (9) prospects of liquidity through financing or refinancing. Management reviews and verifies market research for all potential investments on behalf of the Company. Management also reviews the value of the property, the interest rates and debt service coverage requirements of any debt to be assumed and the anticipated sources of repayment for such debt. The Company's Declaration of Trust places no limitations on the percentage of the Company's total assets that may be invested in any one property or joint venture or on the nature or identity of the operators of such properties. The independent Trustees of the Company, however, may establish such limitations as they deem appropriate from time to time. From time to time, the Company enters into senior debt transactions. The Company has no current plans to underwrite securities of other issuers. The Company has authority to offer Shares in exchange for investments which conform to its standards and to repurchase or otherwise acquire its Shares or other securities. The Company has no present plans to invest in the securities of others for the purpose of exercising control, although the Company owns interests in partnerships which own health care facilities. The Company makes loans on such terms as the Trustees may approve. The Company will not, without the prior approval of a majority of Trustees, including a majority of the independent Trustees of the Company, acquire from or sell to any Trustee, director, officer or employee of the Company, or any affiliate thereof, any of the assets or other property of the Company. The Company provides its shareholders on request with annual reports containing audited financial statements and quarterly reports containing unaudited financial information. - 5 - 6 REINVESTMENT OF SALES PROCEEDS In the event the Company sells or otherwise disposes of any of its properties, the independent Trustees will determine whether and to what extent the Company will acquire additional properties or distribute the proceeds to the shareholders. SHORT-TERM INVESTMENTS The Company invests its cash in certain short-term investments during interim periods between the receipt of revenues and distributions to shareholders. Cash not invested in facilities may be invested in interest-bearing bank accounts, certificates of deposit, short-term money-market securities, short-term United States government securities, mortgage-backed securities guaranteed by the Government National Mortgage Association, mortgages insured by the Federal Housing Administration or guaranteed by the Veterans Administration, mortgage loans, mortgage loan participations, and certain other similar investments. The Company's ability to make certain of these investments may be limited by tax considerations. The Company's return on these short-term investments may be more or less than its return on real estate investments. BORROWING POLICIES The Company may incur additional indebtedness when, in the opinion of the Trustees, it is advisable. For short-term purposes, the Company may, from time to time, negotiate lines of credit, arrange for other short-term borrowings from banks or others or issue commercial paper. The Company may arrange for long-term borrowing from banks, insurance companies, public offerings or private placements to institutional investors. Under the Company's Declaration of Trust and under documents pertaining to certain existing indebtedness, the Company is subject to various restrictions with respect to borrowings. See "Prohibited Investments and Activities." In addition, the Company may incur mortgage indebtedness on real estate which it has acquired through purchase, foreclosure or otherwise. When terms are deemed favorable, the Company may invest in properties subject to existing loans or mortgages. The Company also may obtain financing for unleveraged properties in which it has invested or may refinance properties acquired on a leveraged basis. There is no limitation on the number or amount of mortgages which may be placed on any one property, but overall restrictions on mortgage indebtedness are provided under documents pertaining to certain existing indebtedness. PROHIBITED INVESTMENTS AND ACTIVITIES The Declaration of Trust prohibits the Company from engaging in any investment practices or activities that would disqualify the Company as a real estate investment trust under the provisions of the Internal Revenue Code. In addition to prohibitions and restrictions imposed by the Declaration of Trust, there are and may be, from time to time, additional restrictions imposed by debt instruments or other agreements entered into by the Company. - 6 - 7 POLICY CHANGES The Declaration of Trust may not be changed by the Trustees without shareholder approval except in limited circumstances to comply with federal and state law. All other policies set forth herein may be changed by the Trustees without shareholder approval. COMPETITION The Company competes, primarily on the basis of knowledge of the industry, economics of the transaction and flexibility of financing structure, with real estate partnerships, other real estate investment trusts, banks and other investors generally in the acquisition, leasing and financing of health care related facilities. The operators of the facilities compete on a local and regional basis with other operators of comparable facilities. They compete with independent operators as well as companies managing multiple facilities, some of which are substantially larger and have greater resources than the operators of the Company's facilities. Some of these facilities are operated for profit while others are owned by governmental agencies or tax-exempt not-for-profit organizations. EMPLOYEES As of December 31, 1995, the operations of the Company were maintained by 37 employees. The Company has not experienced any significant labor problems and believes that its employee relations are good. DECLARATION OF TRUST The Declaration of Trust of the Company provides that shareholders of the Company shall not be subject to any liability for the acts or obligations of the Company and that, as far as is practicable, each written agreement of the Company is to contain a provision to that effect. No personal liability will attach to the shareholders for claims under any contract containing such a provision in writing where adequate notice is given of such provision, except possibly in a few jurisdictions. With respect to all types of claims in such jurisdictions and with respect to tort claims, contract claims where the shareholder liability is not disavowed as described above, claims for taxes and certain statutory liabilities in other jurisdictions, a shareholder may be held personally liable to the extent that claims are not satisfied by the Company. However, the Declaration of Trust provides that, upon payment of any such liability, the shareholder will be entitled to reimbursement from the general assets of the Company. The Trustees intend to conduct the operations of the Company, with the advice of counsel, in such a way as to avoid, as far as is practicable, the ultimate liability of the shareholders of the Company. The Trustees do not intend to provide insurance covering such risks to the shareholders. GOVERNMENT REGULATION The amount of percentage rent or additional interest, if any, which generally is based on the health care facility operator's gross revenues, is in most cases subject to changes in the reimbursement and licensure policies of federal, state and local governments. In addition, the acquisition of health care facilities is generally subject to state and local regulatory approval. - 7 - 8 MEDICARE, MEDICAID, BLUE CROSS AND OTHER PAYORS Certain of the operators receive payments for patient care from federal Medicare programs for elderly and disabled patients, state Medicaid programs for medically indigent and cash grant patients, private insurance carriers, employers and Blue Cross plans, health maintenance organizations, preferred provider organizations and directly from patients. In general, Medicare payments for long-term care services, psychiatric care, and rehabilitative care are based on allowable costs plus a return on equity for proprietary facilities. Payments from state Medicaid programs for psychiatric care are based on reasonable costs or are at fixed rates. Long-term care facilities are generally paid by the Medicaid programs at fixed rates. Most Medicare and Medicaid payments are below retail rates. Payments from other payors are generally also below retail rates. Blue Cross payments in different states and areas are based on costs, negotiated rates or retail rates. LONG-TERM CARE FACILITIES Regulation of long-term care facilities is exercised primarily through the licensing of such facilities. The particular agency having regulatory authority and the license qualification standards vary from state to state and, in some instances, from locality to locality. Licensure standards are constantly under review and undergo periodic revision. Governmental authorities generally have the power to review the character, competence and community standing of the operator and the financial resources and adequacy of the facility, including its plant, equipment, personnel and standards of medical care. Long-term care facilities are certified under the Medicare program and all are eligible to qualify under state Medicaid programs, although not all participate in the Medicaid programs. REHABILITATION HOSPITALS Rehabilitation hospitals are also subject to extensive federal, state and local legislation and regulation. Rehabilitation hospitals are subject to periodic inspections and licensure requirements. Inpatient rehabilitation facilities are cost-reimbursed, receiving the lower of reasonable costs or reasonable charges. Typically, the fiscal intermediary pays a set rate per day based on the prior year's costs for each facility. Annual cost reports are filed with the operator's fiscal intermediary and adjustments are made, if necessary. MEDICAL OFFICE BUILDINGS The individual physicians, groups of physicians and health care providers which occupy medical office buildings are subject to a variety of federal, state and local regulations applicable to their specific areas of practice. Since medical office buildings may contain numerous types of medical services, a wide variety of regulations may apply. In addition, medical office buildings must comply with the requirements of municipal building codes, health codes and local fire departments. ACUTE CARE HOSPITALS Acute care hospitals are subject to extensive federal, state and local legislation and regulation relating to among other things the adequacy of medical care, equipment, personnel, hygiene, operating policies and procedures, fire prevention, rate-setting and compliance with building codes and environmental protection laws. Hospitals must maintain strict standards in order to obtain their state hospital licenses from a department of health or other applicable agency in each state. In granting and renewing licenses, a department of health considers, among other things, the physical buildings and equipment, the qualifications of the administrative personnel and nursing staff, the quality of care and - 8 - 9 continuing compliance with the laws and regulations relating to the operation of the facilities. State licensing of facilities is a prerequisite to certification under the Medicare and Medicaid programs. Various other licenses and permits also are required in order to dispense narcotics, operate pharmacies, handle radioactive materials and operate certain equipment. Hospital facilities are subject to periodic inspection by governmental and other authorities to assure continued compliance with the various standards necessary for their licensing and accreditation. RETIREMENT AND ASSISTED LIVING Residential communities such as retirement and assisted living facilities are subject to varying degrees of regulation and licensing by local and state health and social service agencies, and other regulatory authorities specific to their location. Typically these regulations and licensing requirements relate to fire safety, sanitation, staff training, staffing levels and living accomodations, as well as requirements specific to certain health related services offered. Levels of service provided and corresponding regulation vary considerably from operator to operator as some are similiar to long-term care facilities, while others fall into the relatively unregulated care of a retirement community. ALCOHOL AND SUBSTANCE ABUSE TREATMENT FACILITIES Alcohol and substance abuse treatment facilities must comply with the licensing requirements of federal, state and local health agencies and with the requirements of municipal building codes, health codes and local fire departments. In granting and renewing a facility's license, a state health agency considers, among other things, the physical buildings and equipment, the qualifications of the administrative personnel and health care staff, the quality of nursing and other services and the continuing compliance of such facility with the laws and regulations applicable to its operations. PSYCHIATRIC HOSPITALS Psychiatric hospitals generally are subject to extensive federal, state and local legislation and regulation. Licensing for psychiatric hospitals is subject to periodic inspections regarding standards of medical care, equipment and hygiene. In addition, there are specific laws regulating civil commitment of patients and disclosure of information regarding patients being treated for chemical dependency. Many states have adopted a "patient's bill of rights" which sets forth standards, such as using the least restrictive treatment, allowing patient access to the telephone and mail, allowing the patient to see a lawyer and requiring the patient to be treated with dignity. Insurance reimbursement for psychiatric treatment generally is more limited than for general health care. HEALTH CARE REFORM AND REGULATION Many of the operators with which the Company does business rely on government reimbursement, primarily Medicare and Medicaid, for a significant portion of their operating revenues. During the 1994 session of the United States Congress, there was active consideration of various proposals for national health care reform, including the administration's proposal to cap national health care spending and the future growth of Medicare and Medicaid funding. Other recent proposals include replacement of the current Medicaid program with block grants to the states and other limitations on Medicaid spending. Some of these proposals, if enacted, could have an adverse effect on operators doing business with the Company. No such legislation was passed during the 1994 session of Congress. However, such legislation is again being considered during the current session of Congress. It is not possible to predict whether and when health care reform legislation will be passed by Congress and, if passed, what features such legislation will contain or the effect it may have on the nursing home, assisted living or rehabilitation care industries, the reimbursements levels available to health care providers or on the health care industry in general. From time to time, Medicaid, Medicare and other governmental payers have reviewed the billing practices of many health care facilities operators including certain of the operators with which the Company does business. It is unclear what impact such reviews may have on these operators. The Company does not believe, however, that any adverse findings against these operators would materially affect the Company's financial position. - 9 - 10 ITEM 2. PROPERTIES The table sets forth certain information as of December 31, 1995 regarding the Company's facilities:
PURCHASE PRICE ANNUAL BASE RENT NUMBER OF NUMBER OF OR MORTGAGE PLUS DEBT SERVICE OR LOCATION FACILITIES BEDS (1) AMOUNT (2) INTEREST PAYMENT(3) - -------- ---------- -------- ---------- ------------------- (DOLLARS IN THOUSANDS) LONG-TERM CARE FACILITIES Alabama 1 230 $ 7,759 $ 940 Arizona 6 1,034 37,876 (4) 3,754 California 1 179 6,455 (4) 612 Colorado 6 870 36,211 (4) 4,119 Connecticut 18 2,420 123,788 (5) 14,406 Florida 10 1,397 79,902 (6) 10,909 Georgia 1 83 2,993 (4) 612 Idaho 1 155 5,590 (4) 612 Illinois 26 2,332 50,006 (4) 5,000 Indiana 11 1,500 55,184 (13) 5,871 Kansas 3 383 13,718 (4) 1,684 Kentucky 1 228 10,059 (18) 710 Maryland 1 170 18,188 1,910 Massachusetts 34 5,098 326,561 (7) 35,881 Michigan 7 900 28,210 (8) 3,483 Missouri 10 1,305 43,296 (14) 4,850 Nebraska 2 263 9,370 (4) 984 Nevada 2 433 21,447 (19) 2,369 New Jersey 8 1,440 66,383 (9) 7,092 New York 4 512 50,826 6,000 North Carolina 2 240 7,357 (4) 906 Ohio 7 766 34,361 (15) 3,747 Pennsylvania 14 2,285 88,241 (10) 11,271 Rhode Island 1 160 4,952 (4) 532 Tennessee 9 1,231 42,687 (4) 4,874 Texas 47 4,560 107,199 (4) 11,313 Utah 2 240 9,276 (4) 1,181 Washington 4 510 16,909 (4) 1,879 West Virginia 7 615 29,747 (16) 2,937 Wyoming 1 150 6,849 (4) 743 --- ------ --------- -------- TOTAL LONG-TERM CARE 247 31,689 1,341,400 151,181 --- ------ --------- -------- REHABILITATION HOSPITALS Arizona 1 80 9,965 1,196 Arkansas 2 122 17,451 1,999 California 5 298 67,907 (11) 8,395 Colorado 1 118 10,861 (4) 1,140 Kansas 1 80 11,649 1,437 Kentucky 1 55 10,000 1,050 Louisiana 2 170 21,920 2,752 Massachusetts 1 80 10,859 1,050 Michigan 1 55 7,821 817
- 10 - 11 Rehabilitation Hospitals, continued
PURCHASE PRICE ANNUAL BASE RENT NUMBER OF NUMBER OF OR MORTGAGE PLUS DEBT SERVICE OR LOCATION FACILITIES BEDS (1) AMOUNT (2) INTEREST PAYMENT(3) - -------- ---------- -------- ---------- ------------------- New Hampshire 1 128 13,571 1,354 New Jersey 1 70 14,300 1,501 New York 1 28 4,701 493 Tennessee 1 60 8,715 (4) 1,089 Texas 3 200 34,889 4,541 Washington 1 52 5,861 615 Wisconsin 1 125 13,888 1,556 -- ----- ------- ------ TOTAL REHABILITATION 24 1,721 264,358 30,985 -- ----- ------- ------ MEDICAL OFFICE BUILDINGS California 2 13,070 (12) 1,241 Connecticut 1 13,892 (12) 1,390 Florida 8 92,726 (17) 5,621 Massachusetts 1 7,301 (12) 211 Tennessee 1 8,080 (4) 714 Texas 1 10,494 (12) 997 -- ------- ------ TOTAL MEDICAL OFFICE BUILDINGS 14 145,563 10,174 -- ------- ------ ACUTE CARE HOSPITAL Arizona 1 492 65,650 7,222 -- --- ------- ------ RETIREMENT LIVING FACILITIES Colorado 1 220 15,683 (4) 1,686 Florida 1 184 11,623 (4) 1,162 Nebraska 1 150 4,505 (4) 493 Utah 1 287 9,194 (4) 1,002 Wyoming 1 161 7,351 (4) 798 -- ----- ------- ------- TOTAL RETIRMENT LIVING 5 1,002 48,356 5,141 -- ----- ------- ------- ASSISTED LIVING Florida 1 126 21,400 (12) 2,141 Michigan 1 80 4,054 (4) 399 -- ----- ------- ------- TOTAL ASSISTED LIVING 2 206 25,454 2,540 -- ----- ------- -------
- 11 - 12
PURCHASE PRICE ANNUAL BASE RENT NUMBER OF NUMBER OF OR MORTGAGE PLUS DEBT SERVICE OR LOCATION FACILITIES BEDS (1) AMOUNT (2) INTEREST PAYMENT(3) -------- ---------- -------- ---------- ------------------- PSYCHIATRIC HOSPITALS AND ALCOHOL AND SUBSTANCE ABUSE Arizona 1 114 7,916 (4) 990 California 1 61 5,750 719 Louisiana 1 100 8,750 1,050 Florida, New York and Oklahoma 5 564 33,258 (4) 3,658 Texas 2 156 11,248 1,456 --- --- ------- ------ TOTAL PSYCHIATRIC AND ALCOHOL AND SUBSTANCE ABUSE 10 995 66,922 7,873 -- --- -------- ----- TOTAL ALL FACILITIES (20) 303 36,105 $1,957,703 $215,116 === ====== ========== ======== (1) Based upon information provided by the operators of the facilities, the average occupancy of the Company's portfolio of operating facilities for the nine months ended September 30, 1995, was as follows: long-term care facilities, 86%; rehabilitation hospitals, 65%; alcohol and substance abuse treatment facilities, 70%; psychiatric hospitals, 55%; retirement living facilities, 91%, acute care hospitals 50%. Generally, average occupancy rates are determined by dividing the number of patient days in each period by the average number of licensed bed days during such period. (2) Represents purchase price or mortgage amount at December 31, 1995 for operating facilities and the estimated construction loan amount for facilities under construction. (3) The annual base rentals/interest payments under the leases or mortgages are generally projected to be approximately 9% - 13% of the purchase price or mortgage amount, in accordance with the terms of the respective agreements. Base rent excludes additional and percentage rent and interest but includes an aggregate of $6,967,000 in debt service. Additional and percentage rent and interest for the year ended December 31, 1995 was an aggregate of $9,106,000 for all of the facilities. Additional and percentage rent and interest are calculated based upon a percentage of a facility's revenues over an agreed upon base amount or an automatic annual escalation. (4) Permanent mortgage loans. (5) Includes permanent mortgage loans aggregating $44,580,000. (6) Includes a permanent mortgage loan of $50,406,000 and a construction loan of $15,496,000. (7) Includes permanent mortgage loans of $133,285,000 and construction loans of $45,159,087. (8) Includes permanent mortgage loans of $20,726,000. (9) Includes a permanent mortgage loan of $25,898,000. (10) Includes a permanent mortgage loan of $69,770,000 and construction loans of $6,939,000.
- 12 - 13 (11) Includes a permanent mortgage loan of $28,919,000. (12) Development loans. (13) Includes permanent mortgage and construction loans of $48,915,000. (14) Includes permanent mortgage loans of $34,498,000. (15) Includes permanent mortgage loans of $5,111,000. (16) Includes permanent mortgage loans of $12,547,000. (17) Includes permanent mortgage and construction loans of $12,400,000 and $80,326,000, respectively. (18) Includes permanent mortgage and construction loans of $4,609,000 and $5,450,000, respectively. (19) Includes permanent mortgage and construction loans of $18,389,000 and $3,058,000, respectively. (20) Investments by the Company in facilities operated by Sun Healthcare Group, Inc., Life Care Centers of America, Inc., Springwood/Chur Associates, Horizon/CMS Inc., Health Asset Realty Trust, and Geriatric and Medical Centers, Inc., represented 21%, 21%, 7%, 7%, 5%, and 5%, respectively, of the Company's total portfolio as of December 31, 1995. Long-Term Care Facilities. The long-term care facilities offer restorative, rehabilitative and custodial nursing care for patients not requiring more extensive and sophisticated treatment available at acute care hospitals. The facilities are designed to provide custodial care and to supplement hospital care and many have transfer agreements with one or more acute care hospitals. Rehabilitation Hospitals. The rehabilitation hospitals provide treatment to restore physical, psycho-social, educational, vocational and economic usefulness and independence to disabled persons. Rehabilitation concentrates on physical disabilities and impairments and utilizes a coordinated multidisciplinary team approach to help patients attain measurable goals. Medical Office Buildings. Medical office building facilities contain individual physician, physician group and other health care provider offices for the administration and treatment of patients, usually in close proximity to the general service acute care hospital to which the physicians are affiliated. The types of services provided in a medical office building may include outpatient therapy, clinics, examination facilities and the provision of other medical services in a non-hospital setting. Acute Care Hospitals. Acute care hospitals provide services that include, among others, general surgery, internal medicine, obstetrics, emergency room care, radiology, diagnostic services, coronary care, pediatric services and psychiatric services. On an outpatient basis, the services include, among others, same day surgery, diagnostic radiology (e.g. magnetic resonance imaging, CT scanning, X-ray), rehabilitative therapy, clinical laboratory services, pharmaceutical services and psychiatric services. - 13 - 14 Retirement Living Facilities. The retirement living facilities offer specially designed residential units for active and ambulatory elderly residents and provide various ancillary services. They may contain nursing facilities to provide a continuum of care. The retirement living facilities offer their residents an opportunity for an independent lifestyle with a range of social and health services. Assisted Living Facilities. The assisted living facility provides a combination of housing, supportive services, personalized assistance and health care designed to respond to individual needs for daily living and instrumental activities. Support services are generally available 24 hours a day to meet scheduled and unscheduled needs. Alcohol and Substance Abuse Treatment Facilities. These facilities provide inpatient treatment for alcohol and substance abuse, including medical evaluation, detoxification and rehabilitation. Specialized programs offer treatment for adults, adolescents, families and chronic abusers. Psychiatric Hospitals. The psychiatric hospitals offer comprehensive, multidisciplinary adult, adolescent and substance abuse psychiatric programs. Patients are evaluated upon admission and an individualized treatment plan is developed. Elements of the treatment plan include individual, group and family therapy, activity therapy, educational programs and career and vocational planning. - 14 - 15 LEASES Each facility (which includes the land, buildings, improvements, related easements, and rights and fixtures (the "Leased Properties")) that is owned by the Company is leased pursuant to a long-term triple net lease (collectively, the "Leases") which generally contains terms as outlined below. Generally, the Leased Properties do not include major movable equipment. The Leases generally have a fixed term of approximately 10 years and contain multiple renewal options. Some Leases are subject to earlier termination upon the occurrence of certain contingencies described in the Lease. The Company's Leased Properties aggregated approximately $746,000,000 of gross real estate investments at December 31, 1995. The base rents range from approximately 9% to 13% per annum of the Company's equity investment in the Leased Properties and many may be adjusted upward during the fifth year of the Leases to an amount equal to 300 to 500 basis points over the five-year United States Treasury securities' yield at the time of adjustment. The base rents for the renewal periods are generally fixed rents for the initial renewal periods and market rates for later renewal periods. All Leases provide for either an automatic fixed annual rent escalation or additional variable rents in addition to the base rent, based on revenues exceeding specified base revenues. In addition, the Company typically charges a lease commitment fee at the initiation of the sale/leaseback transaction. Each Lease is a triple net lease requiring the lessee to pay rent and all additional charges incurred in the operation of the Leased Property. The lessees are required to repair, rebuild and maintain the Leased Properties. The obligations under the Leases are generally guaranteed by the parent corporation of the lessee, if any, or affiliates or individual principals of the lessee. Some obligations are further backed by letters of credit, cash collateral or pledges of certificates of deposit from various financial institutions which may cover up to one full year's lease payments and which remain in effect until the expiration of a fixed time period or the fulfillment of certain performance criteria. The Company also obtains other credit enhancement devices similar to those it may obtain with respect to permanent mortgage loans. See "Permanent Mortgage Loans" for description. With respect to two of the facilities, the Company leases the land pursuant to ground leases and in turn subleases the land to the operator of the facility. Such subleases contain terms substantially similar to those found in the Leases. PERMANENT MORTGAGE LOANS The Company's permanent mortgage loan program is comprised of secured loans which are structured to provide the Company with interest income, additional interest based upon the revenue growth of the operating facility or a fixed rate increase, principal amortization and commitment fees. Virtually all of the approximately $989,000,000 of permanent mortgage loans as of December 31, 1995 are first mortgage loans. The interest rates on the Company's investments in permanent mortgage loans for operating facilities range from approximately 9% to 13% per annum on the outstanding balances. The yield to the Company on permanent mortgage loans depends upon a number of factors, including the stated interest - 15 - 16 rate, average principal amount outstanding during the term of the loan, the amount of the commitment fee charged at the inception of the loan, the interest rate adjustments and the additional interest earned. The permanent mortgage loans for operating facilities made through December 31, 1995 are generally subject to 10-year terms with up to 30-year amortization schedules that provide for a balloon payment of the outstanding principal balance at the end of the tenth year. Some of the mortgages include an interest adjustment in the fifth year which generally provides for interest to be charged at the greater of the current interest rate or 300 to 400 basis points over the five-year United States Treasury securities' yield at the time of adjustment. The Company generally requires a variety of additional forms of security and collateral beyond that which is provided by the lien of the mortgage. For example, the Company requires one or more of the following items: (a) a guaranty of the complete payment and performance of all obligations associated with each mortgage loan from the borrower's parent corporation, if any, other affiliates of the borrower and/or one or more of the individual principals controlling such borrower; (b) a collateral assignment from the borrower of the leases and the rents relating to the mortgaged property; (c) a collateral assignment from the borrower of all permits, licenses, approvals and contracts relating to the operation of the mortgaged property; (d) a pledge of all, or substantially all, of the equity interest held in the borrower; (e) cash collateral or a pledge of a certificate of deposit, for a negotiated dollar amount typically equal to three months to one year's principal and interest on the loan (which cash collateral or pledge of certificate of deposit typically remains in effect until the later to occur of (i) three years after the closing of the mortgage loan or (ii) the achievement by the facility of an agreed-upon cash flow debt coverage ratio for three consecutive fiscal quarters and, in the event that after the expiration of the letter of credit or pledge of certificate of deposit, the agreed-upon financial covenants are not maintained throughout the loan term, the borrower is often required to reinstate the cash collateral or pledge of certificate of deposit); (f) an agreement by any affiliate of the borrower or operator of the facility to subordinate all payments due to it from the borrower to all payments due to the Company under the mortgage loan; and (g) a security interest in all of the borrower's personal property, including, in some instances, the borrower's accounts receivable. In addition, the mortgage loans are generally cross-defaulted and cross-collateralized with any other mortgage loans, leases or other agreements between the borrower or any affiliate of the borrower and the Company. DEVELOPMENT LOANS The Company makes development loans that by their terms convert either into sale/leaseback transactions or permanent mortgage loans upon the completion of the facilities. Generally, the interest rates on the outstanding balances of the Company's development loans are up to 300 basis points over the prime rate of a specified financial institution. The Company also typically charges a commitment fee at the commencement of the loan. The development loan period generally commences upon the funding of such loans and terminates upon the earlier of the completion of development of the applicable facility or a specific date. This period is generally 12 to 18 months. During the term of the development loan, funds are advanced pursuant to draw requests made by the borrower in accordance with the terms and conditions of the applicable loan agreement which require a site visit prior to the advancement of funds. Monthly payments of interest only are made on the total amount of the loan proceeds advanced during the development period. Meditrust began its development loan program in August 1987 and since that time has converted many of these development loans into sale/leaseback transactions or permanent mortgage loans representing an investment of $312,500,000 as of December 31, 1995. In addition, at December 31, - 16 - 17 1995 the Company had outstanding development loans of $119,884,000 and was committed to providing additional financing of approximately $102,701,000. As with the Company's permanent mortgage financing program, the development loans generally include a variety of additional forms of security and collateral beyond the lien of the mortgage. See "Permanent Mortgage Loans." During the development loan period, the Company generally requires additional security and collateral in the form of either payment and performance completion bonds or completion guarantees by either one, or a combination of, the borrower's parent entity, other affiliates of the borrower or one or more of the individual principals of the borrower. As a further safeguard during the development loan period, the Company generally will retain a portion of the loan proceeds equal to 10% of the principal loan amount until it has received satisfactory evidence that the project has been fully completed in accordance with the applicable plans and specifications and the period during which liens may be perfected with respect to any work performed, or labor or materials supplied, in connection with the construction of the project has expired. The Company also monitors the progress of the development of each project, the construction budget and the accuracy of the borrower's draw requests by having its own inspector perform on-site inspections of the project prior to the release of any requested funds. ITEM 3. LEGAL PROCEEDINGS In December 1993, the Chapter 11 Trustee of Towers Financial Corporation commenced an action in the Suffolk County Superior Court for the Commonwealth of Massachusetts against one of the Company's lessees and in January 1994 two subsidiaries of the Company were named as additional defendants. The plaintiff alleges that it holds a prior security interest in the accounts receivable of seven health care facilities, one of which is owned by the Company. The plaintiff demands payment of all such receivables including those collected by the Company in an amount up to $17,000,000. The Company is vigorously defending this action. It has filed an answer and counterclaim denying any liability to the plaintiff and asserting that the plaintiff does not have a valid prior security interest in any assets of the Company or its borrowers. The Company is a party to a number of other claims and lawsuits arising out of the normal course of business; the Company believes that none of these claims or pending lawsuits, either individually or in the aggregate, will have a material adverse affect on the Company's business or on its consolidated financial position. - 17 - 18 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE. ITEM 4a. EXECUTIVE OFFICERS OF THE REGISTRANT The following information relative to the Company's executive officers is given as of January 29, 1996:
Name Age Position with the Company ---- --- ------------------------- Abraham D. Gosman 67 Chairman, Chief Executive Officer and Trustee David F. Benson 46 President and Trustee Michael F. Bushee 38 Chief Operating Officer Michael S. Benjamin 38 Senior Vice President, Secretary and Corporate Counsel Lisa P. McAlister 32 Chief Financial Officer and Treasurer Stephen C. Mecke 33 Vice President of Development Debora A. Pfaff 32 Vice President of Operations Stephen H. Press 58 Vice President of Acquisitions John G. Demeritt 35 Controller
Abraham D. Gosman has been Chairman of the Company since its organization in 1985 and became Chief Executive Officer in February 1991. Mr. Gosman is also founder, Chairman of the Board, CEO and President of PhyMatrix Corporation, a provider of managerial/administrative services to a variety of specialized medical care and treatment providers, which completed its initial public offer in January 1996 (NASDAQ/PHMX). Mr. Gosman was the Chief Executive Officer and Chairman of the Board of The Mediplex Group, Inc. ("Mediplex"), an operator and developer of health care facilities, from August 1990 until June 1994, when Mediplex was acquired by Sun. Mr. Gosman has been in the health care and development business for more than thirty years. David F. Benson has been President of the Company since September 1991 and was Treasurer of the Company from January 1986 to May 1992. He was Treasurer of Mediplex from January 1986 through June 1987. He was previously associated with Coopers & Lybrand, independent accountants, from 1979 to 1985. Mr. Benson is also a Trustee of Mid-Atlantic Realty Trust, a shopping center REIT, traded on the American Stock Exchange. - 18 - 19 Michael F. Bushee has been Chief Operating Officer of the Company since September 1994. He was Senior Vice President of Operations of the Company from November 1993 through August 1994, Vice President from December 1989 to October 1993, Director of Development from January 1988 to December 1989 and has been associated with the Company since April 1987. He was previously associated with The Stop & Shop Companies, Inc., a retailer of food products and general merchandise, for three years and Wolf & Company, P.C., independent accountants, for four years. He is also a Director of Sterling House Corporation, an assisted-living provider, traded on the American Stock Exchange. Michael S. Benjamin has been Senior Vice President, Secretary and General Counsel of the Company since October 1993. He was Vice President, Secretary and General Counsel from May 1992 to October 1993, Secretary and General Counsel from December 1990 to May 1992 and Assistant Counsel to the Company from November 1989 to December 1990. His previous association was with the law firm of Brown, Rudnick, Freed & Gesmer, from 1983 to 1989. Lisa P. McAlister has been Chief Financial Officer and Treasurer of the Company since October 1995, Vice President of the Company since October 1993 and Treasurer since May 1992. She was Controller from December 1990 to May 1992 and Assistant Controller of the Company from November 1988 to December 1990. She was previously associated with Arthur Andersen & Co., independent accountants, from 1985 to 1988. Stephen C. Mecke has been Vice President of Development since October 1995 and has been the Company's Director of Development since June 1992. He was previously the manager of underwriting at Continental Realty Credit Inc., a commercial mortgage company, from October 1988 to June 1992. Debora A. Pfaff has been Vice President of Operations since October 1995 and has been the Company's Director of Operations since September 1992. Ms. Pfaff was previously Senior Manager with KPMG Peat Marwick where she worked from 1985 to 1992. Stephen H. Press has been Vice President of Acquisitions of the Company since October 1993 and previously held this position with the Company from June 1987 to December 1990. He was Vice President of Development and Regulatory Affairs for Integrated Health Services, Inc., a medical services company, from April 1991 to October 1993. John G. Demeritt has been Controller of the Company since October 1995. Prior to that, he was Corporate Controller of CMG Information Services, Inc., an information service provider, from 1994 to 1995. He was Vice President of Finance and Treasurer of Salem Sportswear Corporation, a manufacturer and marketer of licensed sports apparel, from June 1991 to November 1993. He was Controller of Scitex America Corporation, a manufacturer and distributor of electronic prepress equipment, from August 1986 to June 1991, and was previously associated with Laventhol & Horwath, independent accountants, from 1983 to 1986. - 19 - 20 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) and (b) The Company's Shares are traded on the New York Stock Exchange under the symbol MT. The following table sets forth for the periods shown the high and low sales prices for the Shares (as reported on the New York Stock Exchange Composite Tape):
1995 1994 ---------------- ----------------- Quarter High Low Quarter High Low - -------------------------------- -------------------------------- First $32.13 $29.50 First $35.25 $31.38 Second $34.13 $29.00 Second $35.88 $32.13 Third $35.50 $32.63 Third $34.25 $30.63 Fourth $35.50 $31.25 Fourth $32.63 $28.75 There were approximately 5,200 holders of record of the Company's Shares as of January 29, 1996. Included in the number of Shareholders of record are Shares held in "nominee" or "street" name.
(c) The Company has declared the following distributions during its two most recent fiscal years:
Distributions Period Declared Per Share ------ ------------------ Quarter Ended March 31, 1994 . . . . . . . . . . . . . . $.6475 Quarter Ended June 30, 1994 . . . . . . . . . . . . . . . .6525 Quarter Ended September 30, 1994 . . . . . . . . . . . . .6575 Quarter Ended December 31, 1994 . . . . . . . . . . . . . .6625 ------ $ 2.62 ====== Quarter Ended March 31, 1995 . . . . . . . . . . . . . . $.6675 Quarter Ended June 30, 1995 . . . . . . . . . . . . . . .6725 Quarter Ended September 30, 1995 . . . . . . . . . . . . .6775 Quarter Ended December 31, 1995 . . . . . . . . . . . . . .6825 ------ $ 2.70 ======
The Company intends to distribute to its shareholders on a quarterly basis a majority of cash flow from operating activities available for distribution. Cash flow from operating activities available for distribution to shareholders of the Company will be derived primarily from the rental payments and interest payments derived from its real estate investments. All distributions will be made by the Company at the discretion of the Trustees and will depend on the earnings of the Company, its financial condition and such other factors as the Trustees deem relevant. In order to qualify for the beneficial tax treatment accorded to real estate investment trusts by Sections 856 to 860 of the Internal Revenue Code, the Company is required to make distributions to holders of its Shares of at least 95% of its "real estate investment trust taxable income". - 20 - 21 ITEM 6. SELECTED FINANCIAL INFORMATION
Year Ended December 31, ---------------------------------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- (In thousands except per Share data) OPERATING DATA: Revenues $209,369 $172,993 $150,375 $132,394 $112,910 -------- -------- -------- -------- -------- Expenses: Interest expense . . . . . . . . . 64,163 67,479 62,193 58,159 56,886 Depreciation and amortization . . 18,176 17,171 16,277 14,032 13,185 General and administrative expenses 7,058 7,883 8,269 8,845 4,930 -------- -------- -------- -------- -------- Total expenses . . . . . . . . . 89,397 92,533 86,739 81,036 75,001 -------- -------- -------- -------- -------- Net income before extraordinary item 119,972 80,460 63,636 51,358 37,909 Loss on prepayment of debt . . . . . 33,454 3,684 -------- -------- -------- -------- -------- Net income . . . . . . . . . . . . . $ 86,518 $ 80,460 $ 63,636 $ 51,358 $ 34,225 ======== ======== ======== ======== ======== Shares of beneficial interest (weighted average) . . . . . . . . 47,563 35,314 31,310 26,360 21,710 PER SHARE DATA: Net income before extraordinary item $ 2.52 $ 2.28 $ 2.03 $ 1.95 $ 1.75 Loss on prepayment of debt . . . . . .70 .17 -------- -------- -------- -------- -------- Net income . . . . . . . . . . . . . $ 1.82 $ 2.28 $ 2.03 $ 1.95 $ 1.58 ======== ======== ======== ======== ======== Distributions paid . . . . . . . . . $ 2.70 $ 2.62 $ 2.54 $ 2.46 $ 2.38 ======== ======== ======== ======== ========
December 31, ------------------------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- (In thousands) BALANCE SHEET DATA: Real estate investments, net $1,777,798 $1,484,229 $1,214,308 $1,021,630 $842,518 Total assets . . . . . . . . . . . . 1,891,852 1,595,130 1,310,401 1,094,941 928,254 Indebtedness . . . . . . . . . . . . 762,291 765,752 658,245 606,585 463,695 Total liabilities . . . . . . . . . . 830,097 824,983 724,606 663,458 500,736 Total shareholders' equity . . . . . 1,061,755 770,147 585,795 431,483 427,518
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information required by this item is incorporated by reference to the section entitled "Management's Discussion and Analysis of Financial Condition and Results of operations" in the Current Report on Form 8-K dated January 29, 1996. - 21 - 22 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this item is incorporated herein by reference to the "Consolidated Financial Statements", "Notes to Consolidated Financial Statements" and "Report of Independent Accountants" in the Current Report on Form 8-K dated January 29, 1996. - 22 - 23 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To the Shareholders and Trustees of Meditrust: Our report on the consolidated financial statements of Meditrust has been incorporated by reference in this Form 10-K from Meditrust's Current Report on Form 8-K dated January 29, 1996. In connection with our audits of such financial statements, we have also audited the related financial statement schedules listed in the index on page 33 of this Form 10-K. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. Coopers & Lybrand L.L.P. Boston, Massachusetts January 29, 1996 - 23 - 24 MEDITRUST SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
Additions Balance at Charged to Additions Balance at Beginning of Costs and Charged to End of Description Period Expenses Other Accounts Deductions Period ----------- ------ -------- -------------- ---------- ------ General valuation allowance included in Accrued Expenses and Other Liabilities for the year ended December 31: 1993 $ 2,705,946 $9,329,724 $12,035,670 1994 12,035,670 3,783,176 $11,272,009 (A) 4,546,837 1995 4,546,837 $5,167,735 9,714,572 (A) Includes $9,100,000 reclassified as a reduction to Other Assets and $2,172,009 relating to the valuation of a real estate investment.
Additions Balance at Charged to Additions Balance at Beginning of Costs and Charged to End of Description Period Expenses Other Accounts Deductions Period ----------- ------ -------- -------------- ---------- ------ General valuation allowance included in Other Assets for the year ended December 31: 1994 $ 9,100,000 (A) $9,100,000 1995 $9,100,000 13,325,221 $18,192,698 (B) 4,232,523 (A) Reclassified from valuation allowance included in Accrued Expenses and Other Liabilities. (B) Includes approximately $89,000 relating to the valuation of other assets and $18,104,000 relating to receivables charged off.
- 24 - 25 MEDITRUST SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995
Gross Amount at Which Carried at Close of Period Initial Cost ------------------------------------------------ to Company Cost ---------- Capitalized Building & Subsequent to Building & Accum. Description (1) Encumbrances Improvements Acquisitons Land (2) Improvements Total (5) Deprec.(4)(5) - --------------- ------------ ------------ ----------- -------- ------------ ---------- ------------- LTC - --- Alabaster, AL . . $ 5,799,000 $1,810,000 $ 150,000 $ 7,609,000 $ 7,759,000 $1,399,656 Cheshire, CT . . 6,770,000 455,000 6,770,000 7,225,000 1,727,753 Danbury, CT . . . 5,295,000 305,000 5,295,000 5,600,000 1,351,312 Darien, CT . . . 4,202,477 45,000 4,202,477 4,247,477 175,103 Milford, CT . . . 5,538,590 5,538,590 5,538,590 196,159 Milford, CT . . . 10,000,000 10,000,000 10,000,000 395,833 Newington, CT . . 8,970,000 430,000 8,970,000 9,400,000 2,289,188 Southbury, CT . . 3,224,151 1,020,000 3,224,151 4,244,151 127,623 Southfield, CT . 7,750,000 750,000 7,750,000 8,500,000 419,792 Westport, CT . . 4,970,000 400,000 4,970,000 5,370,000 1,268,374 Wethersfield, CT 12,440,000 6,643,218 19,083,218 19,083,218 3,072,301 Bradenton, FL . . $3,475,000 9,900,000 4,100,000 9,900,000 14,000,000 1,980,000 W. Lafayette, IN 4,313,818 6,030,000 190,000 50,000 6,220,000 6,270,000 1,223,758 Beverly, MA . . . 6,300,000 645,000 6,300,000 6,945,000 1,607,815 Concord, MA . . . 8,762,000 3,538,000 8,762,000 12,300,000 54,763 New Bedford, MA . 7,492,000 1,008,000 7,492,000 8,500,000 46,825 Newton, MA . . . 12,430,000 630,000 12,430,000 13,060,000 3,172,250 Lexington, MA . . 11,210,000 590,000 11,210,000 11,800,000 2,618,865 E. Longmeadow, MA 12,400,000 3,595,928 400,000 15,995,928 16,395,928 2,647,378 Holyoke, MA . . . 11,980,670 684,248 121,600 12,664,918 12,786,518 1,036,353 Lowell, MA . . . 9,897,730 594,621 500,000 10,492,351 10,992,351 853,699 Lynn, MA . . . . 13,293,267 870,248 1,206,734 14,163,515 15,370,249 976,845 Northampton, MA . 2,709,612 187,500 2,709,612 2,897,112 107,255 Peabody, MA . . . 7,245,315 805,035 7,245,315 8,050,350 1,449,066 Randolph, MA . . 9,014,760 1,001,640 9,014,760 10,016,400 1,802,958 Weymouth, MA . . 10,719,932 850,000 10,719,932 11,569,932 424,330 Wilmington, MA . 6,689,925 743,325 6,689,925 7,433,250 1,337,988 Montgomery, MD . 16,888,000 1,300,000 16,888,000 18,188,000 105,550 Grand Blanc, MI . 6,500,000 863,800 120,000 7,363,800 7,483,800 1,346,913 Riverside, MO . . 8,559,900 238,000 8,559,900 8,797,900 1,658,475 Bound Brook, NJ . 1,624,000 1,176,000 1,624,000 2,800,000 365,377 Oradell, NJ . . . 14,986,000 1,714,000 14,986,000 16,700,000 93,662 Camden, NJ . . . 8,334,780 450,250 8,334,780 8,785,030 1,875,311 Marlton, NJ . . . 14,060,000 240,000 14,060,000 14,300,000 87,875 New Milford, NJ . 11,110,000 1,090,000 11,110,000 12,200,000 2,222,010
Const. Date Description (1) Date Acquired - --------------- ---- ----- LTC - --- Alabaster, AL . . 1971 8/87 Cheshire, CT . . 1975 10/85 Danbury, CT . . . 1976 10/85 Darien, CT . . . 1975 6/94 Milford, CT . . . 1971 6/94 Milford, CT . . . 1992 6/94 Newington, CT . . 1978 10/85 Southbury, CT . . 1975 6/94 Southfield, CT . 1993 11/93 Westport, CT . . 1965 10/85 Wethersfield, CT 1965 8/86 Bradenton, FL . . 1985 12/87 W. Lafayette, IN 1964 1/88 Beverly, MA . . . 1972 10/85 Concord, MA . . . 1995 11/95 New Bedford, MA . 1995 11/95 Newton, MA . . . 1977 10/85 Lexington, MA . . 1965 8/86 E. Longmeadow, MA 1986 9/87 Holyoke, MA . . . 1973 9/92 Lowell, MA . . . 1975 9/92 Lynn, MA . . . . 1960 4/93 Northampton, MA . 1974 6/94 Peabody, MA . . . 1987 10/90 Randolph, MA . . 1987 10/90 Weymouth, MA . . 1994 6/94 Wilmington, MA . 1987 10/90 Montgomery, MD . 1995 11/95 Grand Blanc, MI . 1970 5/88 Riverside, MO . . 1965 3/88 Bound Brook, NJ . 1963 12/86 Oradell, NJ . . . 1995 11/95 Camden, NJ . . . 1984 12/86 Marlton, NJ . . . 1995 11/95 New Milford, NJ . 1971 12/87
- 25 - 26 MEDITRUST SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995
Gross Amount at Which Carried at Close of Period Initial Cost ------------------------------------------------ to Company Cost ---------- Capitalized Building & Subsequent to Building & Accum. Description (1) Encumbrances Improvements Acquisitons Land (2) Improvements Total (5) Deprec.(4)(5) - --------------- ------------ ------------ ----------- -------- ------------ ---------- ------------- LTC CONTINUED - ------------- Cortland, NY . . $ 4,440,173 $ 260,930 $ 4,701,103 $ 4,701,103 $ 282,193 Niskayuna, NY . . 9,708,000 834,537 $ 292,000 10,542,537 10,834,537 737,261 Rennsselaer, NY . 1,400,000 1,400,000 1,400,000 40,833 Troy, NY . . . . 9,967,564 491,673 56,100 10,459,237 10,515,337 627,816 Bellbrook, OH . . 2,787,134 212,000 2,787,134 2,999,134 354,197 Huber Heights, OH 3,593,360 174,000 3,593,360 3,767,360 456,656 Swanton, OH . . . 5,500,000 350,000 5,500,000 5,850,000 103,125 Medina, OH . . . $6,828,545 10,568,000 232,000 10,568,000 10,800,000 2,025,553 New London, OH . 2,110,837 22,600 2,110,837 2,133,437 268,253 West Carrolton, OH 3,483,669 216,400 3,483,669 3,700,069 442,718 Erie, PA . . . . 4,753,000 375,000 335,000 5,128,000 5,463,000 1,012,455 Greensburg, PA . 5,544,012 525,000 5,544,012 6,069,012 565,950 (4) Facilities, WV 17,200,000 17,200,000 17,200,000 35,833 REHAB - ----- Benton, AR . . . 7,865,000 392,410 135,000 8,257,410 8,392,410 561,158 Jonesboro, AR . . 4,186,796 8,861,835 196,225 8,861,835 9,058,060 1,535,019 Tucson, AZ . . . 9,965,000 9,965,000 9,965,000 1,349,427 Bakersfield, CA . 10,907,463 1,522,537 10,907,463 12,430,000 1,522,503 Fresno, CA . . . 7,871,103 14,469,580 2,088,920 14,469,580 16,558,500 1,750,167 Kentfield, CA . . 9,650,000 350,000 9,650,000 10,000,000 1,869,679 Topeka, KS . . . 5,140,455 10,353,829 1,295,499 10,353,829 11,649,328 1,794,005 Bowling Green, KY 10,000,000 10,000,000 10,000,000 395,833 Ruston, LA . . . 4,142,481 10,021,462 321,551 10,021,462 10,343,013 1,778,978 Baton Rouge, LA . 5,497,917 10,366,008 1,211,000 10,366,008 11,577,008 1,749,263 New Bedford, MA . 10,000,000 859,303 10,859,303 10,859,303 404,783 Battle Creek, MI 7,265,913 408,529 146,970 7,674,442 7,821,412 523,347 Effingham, NH . . 8,121,200 3,971,031 1,478,800 12,092,231 13,571,031 771,328 Cortland, NY . . 26,309,407 1,503,410 263,000 27,812,817 28,075,817 1,661,810 Arlington, TX . . 10,132,662 1,161,338 10,132,662 11,294,000 1,414,363 Ft. Worth, TX . . 5,860,010 10,814,520 1,548,022 10,814,520 12,362,542 1,464,456 Houston, TX . . . 5,330,235 10,707,069 525,000 10,707,069 11,232,069 1,806,819 Lake Terrace, WA 4,389,224 441,796 1,029,980 4,831,020 5,861,000 194,893 Waterford, WI . . 11,515,023 2,093,205 280,000 13,608,228 13,888,228 906,056
Const. Date Description (1) Date Acquired - --------------- ---- ----- LTC CONTINUED - ------------- Cortland, NY . . 1986 8/93 Niskayuna, NY . . 1976 3/93 Rennsselaer, NY . 1975 11/94 Troy, NY . . . . 1972 8/93 Bellbrook, OH . . 1981 12/90 Huber Heights, OH 1984 12/90 Swanton, OH . . . 1950 4/95 Medina, OH . . . 1954 4/88 New London, OH . 1985 12/90 West Carrolton, OH 1983 12/90 Erie, PA . . . . 1977 12/87 Greensburg, PA . 1991 6/90 (4) Facilities, WV 1987 12/95 REHAB - ----- Benton, AR . . . 1967 4/93 Jonesboro, AR . . 1989 2/89 Tucson, AZ . . . 1990 8/90 Bakersfield, CA . 1990 6/90 Fresno, CA . . . 1991 3/91 Kentfield, CA . . 1963 3/88 Topeka, KS . . . 1989 2/89 Bowling Green, KY 1992 6/94 Ruston, LA . . . 1988 12/88 Baton Rouge, LA . 1988 4/89 New Bedford, MA . 1920 6/94 Battle Creek, MI 1933 4/93 Effingham, NH . . 1985 4/93 Cortland, NY . . 1971 8/93 Arlington, TX . . 1990 6/90 Ft. Worth, TX . . 1990 8/90 Houston, TX . . . 1989 4/89 Lake Terrace, WA 1987 5/93 Waterford, WI . . 1968 4/93
- 26 - 27 MEDITRUST SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995
Gross Amount at Which Carried at Close of Period Initial Cost ------------------------------------------------ to Company Cost ---------- Capitalized Building & Subsequent to Building & Accum. Description (1) Encumbrances Improvements Acquisitons Land (2) Improvements Total (5) Deprec.(4)(5) - --------------- ------------ ------------ ----------- -------- ------------ ---------- ------------- ACUTE CARE HOSPITAL - ------------------- Phoenix, AZ . . . $ 63,960,000 $ 1,690,000 $ 63,960,000 $ 65,650,000 $ 1,465,750 PSYCH - ----- Hollywood, CA . . 4,035,000 1,715,000 4,035,000 5,750,000 773,360 Monroe, LA . . . 7,770,000 $ 450,000 530,000 8,220,000 8,750,000 1,563,114 DeSoto, TX . . . 3,934,000 1,775,730 849,270 5,709,730 6,559,000 1,091,361 College Station, TX 3,650,771 58,122 980,185 3,708,893 4,689,078 384,857 ----------- ------------ ------------ ------------- ------------ ------------ ----------- TOTAL . . . . . . $52,646,360 $669,217,824 $ 29,167,739 $ 47,993,481 $698,385,563 $746,379,044 (3) $77,203,587 =========== ============ ============ ============= ============ ============ ===========
Const. Date Description (1) Date Acquired - --------------- ---- ----- ACUTE CARE HOSPITAL - ------------------- Phoenix, AZ . . . 1954 2/95 PSYCH - ----- Hollywood, CA . . 1957 5/88 Monroe, LA . . . 1982 5/88 DeSoto, TX . . . 1988 1/88 College Station, TX 1987 5/93 TOTAL . . . . . .
- 27 - 28 MEDITRUST SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED DECEMBER 31, 1995 (1) Facility classifications are Long-Term Care (LTC), Retirement Living (RL), Psychiatric Hospital (Psych), Rehabilitation Hospital (Rehab) and Assisted Living (AL). (2) Gross amount at which land is carried at close of period also represents initial cost to the Company. (3) Cost for federal income tax purposes. (4) Depreciation is calculated using a 40-year life for all completed facilities. (5) Real estate and accumulated depreciation reconciliations for the three years ended December 31, 1995 are as follows:
Accumulated Real Estate Depreciation ----------- ------------- Balance at close of year--December 31, 1993 . . . . . . . $ 685,896,000 $ 73,294,000 Additions during the period: Acquisitions . . . . . . . . . . . . . . . . . . . 18,327,000 Value of real estate acquired . . . . . . . . . . 30,000,000 Additions to existing properties . . . . . . . . . 10,785,000 Other . . . . . . . . . . . . . . . . . . . . . . 11,570,000 Provision for depreciation . . . . . . . . . . . . 15,209,000 Deductions: Lease terminations . . . . . . . . . . . . . . . . (124,000,000) (22,463,000) Sale of real estate . . . . . . . . . . . . . . . (4,000,000) Other . . . . . . . . . . . . . . . . . . . . . . (2,172,000) (122,000) ------------- ------------ Balance at close of year-- December 31, 1994 . . . . . . 626,406,000 65,918,000 Additions during the period: Acquisitions . . . . . . . . . . . . . . . . . . . 91,700,000 Value of real estate acquired . . . . . . . . . . 69,988,000 Additions to existing properties . . . . . . . . . 2,487,000 Provision for depreciation . . . . . . . . . . . . 16,283,000 Deductions: Lease terminations . . . . . . . . . . . . . . . . (35,602,000) (3,486,000) Sale of real estate . . . . . . . . . . . . . . . (8,600,000) (1,512,000) -------------- ------------ Balance at close of year--December 31, 1995 . . . . . . . $ 746,379,000 $ 77,203,000 ============== ============
- 28 - 29 MEDITRUST SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE DECEMBER 31, 1995
Periodic Face Carrying Interest Final Payment Amount of Amount of Description (A) Rate Maturity Date Terms (B)(C) Mortgages Mortgages (D) - --------------- ---- ------------- ------------ --------- ------------- Long-term care facilities: Arizona 11.00% - October 2002 9.40% March 2005 $12,708,000 $ 13,515,000 $ 13,426,000 Colorado 10.85% May 2005 5,815,000 5,990,000 5,976,000 Connecticut 9.00% - November 1997 13.50% November 2005 46,203,000 47,493,000 44,580,000 Florida 10.00% - January 1997 10.25% (G) (G) 72,903,000 29,328,000 Illinois (29 facilities) 10.00% February 2005 45,478,000 50,500,000 50,006,000 Indiana 9.15% - November 2005 9.25% October 2005 9,029,000 9,400,000 9,396,000 Massachusetts 10.40% - August 2000 11.50% March 2005 81,452,000 89,253,000 85,487,000 Massachusetts 10.50% June 2004 42,000,000 42,000,000 42,000,000 Massachusetts 9.40% - (G) (G) 10.50% 50,308,000 30,582,000 Michigan 11.75% - December 2001 - 12.75% June 2002 20,770,000 21,768,000 20,726,000 Nevada 10.00% March 2005 7,905,000 10,000,000 9,987,000 New Jersey (E) 11.38% December 1994 8,332,000 3,408,000 3,289,000 North Carolina 12.00% September 1998 2,918,000 3,325,000 3,082,000 Pennsylvania 10.50% - (G) (G) 12.25% June 2002 8,556,000 17,052,000 11,248,000 Pensylvania and New Jersey 12.00% April 2002 77,152,000 86,003,000 83,464,000 Rhode Island 10.75% November 2003 4,851,000 5,000,000 4,952,000 Tennessee 10.00% July 2003 10,888,000 11,222,000 11,077,000 Texas 10.00% February 2005 27,287,000 30,300,000 30,133,000 Texas 10.40% October 2004 42,085,000 46,000,000 45,744,000 Texas 11.20% - November 2000 12.00% November 2004 26,170,000 28,083,000 27,717,000 Utah 11.50% December 2002 4,873,000 5,600,000 4,948,000 Washington 8.87% December 2005 3,050,000 3,050,000 3,050,000 Wyoming 10.85% June 2005 15,630,000 16,100,000 14,200,000 Various (7 states) 10.65% October 2004 36,236,000 42,300,000 41,909,000 Various (9 states) 10.75% May 2003 99,515,000 103,618,000 102,705,000 Various (3 states) 10.85% May 2005 28,307,000 32,837,000 28,560,000 Various (3 states) 10.95% November 2001 29,504,000 37,100,000 36,942,000 Various (12 states) 10.85% August 2005 73,588,000 90,450,000 88,430,000 West Virginia and Pennsylvania 11.00% October 2002 12,269,000 12,900,000 12,547,000
- 29 - 30 MEDITRUST SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE, CONTINUED DECEMBER 31, 1995
Periodic Face Carrying Interest Final Payment Amount of Amount of Description (A) Rate Maturity Date Terms (B)(C) Mortgages Mortgages (D) - --------------- ---- ------------- ------------ --------- ------------- Rehabilitation hospitals: California 12.50% July 2001 $24,042,000 $30,975,000 $28,919,000 Colorado 10.50% July 2004 9,396,000 11,000,000 10,861,000 Tennessee 12.50% September 2000 8,637,000 9,000,000 8,714,000 Medical Office Buildings: California 9.50% (G) (G) 13,070,000 11,350,000 Connecticut 10.00% (G) (G) 13,892,000 8,216,000 Florida 8.72% (G) (G) 43,083,000 32,868,000 Tennessee 8.83% January 2005 8,080,000 8,080,000 8,080,000 Texas 9.50% (G) (G) 10,494,000 9,561,000 Retirement living facilities: Colorado 10.75% April 2004 14,546,000 $16,200,000 $15,683,000 Florida 10.00% January 1996 9,922,000 11,734,000 11,623,000 Nevada and Utah 11.00% January 2000 8,757,000 12,100,000 9,194,000 Assisted living: Florida 10.00% January 2005 21,400,000 12,835,000 Michigan 9.85% September 2005 3,818,000 4,728,000 4,054,000 Psychiatric hospitals and Alcohol & Substance Abuse: Arizona 12.50% October 1999 7,077,000 8,360,000 7,916,000 New York 11.00% January 2006 31,620,000 33,300,000 33,258,000 -------------- -------------- Total $1,234,894,000 $1,108,623,000 (F)(H) ============== ==============
- 30 - 31 MEDITRUST SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE, CONTINUED (A) Virtually all mortgage loans on real estate are first mortgage loans. (B) Terms at or in excess of ten years (except for two properties in Connecticut and a loan on ten facilities located in Missouri, Nebraska and Texas, which are seven years, and two properties located in Florida and Utah which are five years) with principal and interest payable at varying amounts over life to maturity with interest adjustment generally at the end of the fifth year. (C) Balloon payment is due upon maturity based on current interest rate with various prepayment penalties. (D) No mortgage loan is subject to delinquent principal or interest, except for one property located in New Jersey. (E) Mortgage loan term has been extended for a one year period. (F) The aggregate cost for federal income tax purposes. (G) Construction in progress as of the close of the period. (H) Reconciliation of carrying amount of mortgage loans for the three years ended December 31, 1995 is as follows: Balance at December 31, 1992 . . . . . . . . . . . . . . $ 531,816,000 Additions during period: New mortgage loans . . . . . . . . . . . . . . . . 181,908,000 Construction loan advances . . . . . . . . . . . . 28,387,000 Deductions during period: Collection of principal . . . . . . . . . . . . . . (35,490,000) Acquisiton of properties, net . . . . . . . . . . . (88,493,000) Conversion of construction loans to sale/leaseback transactions . . . . . . . . . . (12,244,000) Other . . . . . . . . . . . . . . . . . . . . . . . (4,178,000) -------------- Balance at December 31, 1993 . . . . . . . . . . . . . . 601,706,000 Additions during period: New mortgage loans . . . . . . . . . . . . . . . . 241,339,000 Construction loan advances . . . . . . . . . . . . 49,688,000 Non-cash additions . . . . . . . . . . . . . . . . 71,594,000 Deductions during period: Collection of principal . . . . . . . . . . . . . . (5,149,000) Conversion of construction loans to sale/leaseback transactions . . . . . . . . . . (10,239,000) Prepayment of mortgage loans . . . . . . . . . . . (14,835,000) Other . . . . . . . . . . . . . . . . . . . . . . . (10,363,000) -------------- Balance at December 31, 1994 . . . . . . . . . . . . . . 923,741,000 Additions during period: New mortgage loans . . . . . . . . . . . . . . . . 152,216,000 Construction loan advances . . . . . . . . . . . . 106,946,000 Other . . . . . . . . . . . . . . . . . . . . . . . 9,953,000 Deductions during period: Collection of principal . . . . . . . . . . . . . . (6,615,000) Non-cash deductions . . . . . . . . . . . . . . . . (34,386,000) Prepayment of mortgage loans . . . . . . . . . . . (43,232,000) -------------- Balance at December 31, 1995 . . . . . . . . . . . . . . $1,108,623,000 ==============
- 31 - 32 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE NOT APPLICABLE. PART III Item 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT Incorporated by reference to Item 4a above and the table and the information following it appearing in the first subsection of the section entitled "Election of Trustees" contained in the Company's Proxy Statement for its Annual Meeting of Shareholders ("Annual Meeting Proxy Statement"), to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended ("Regulation 14A"). There are no family relationships among any of the Trustees or executive officers of the Company. Incorporated by reference to the section entitled "Certain Transactions" contained in the Company's Annual Meeting Proxy Statement, to be filed pursuant to Regulation 14A. Item 11. EXECUTIVE COMPENSATION Incorporated by reference to the section entitled "Executive Compensation" contained in the Company's Annual Meeting Proxy Statement, to be filed pursuant to Regulation 14A. Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated by reference to the table appearing in the first subsection of the section entitled "Election of Trustees" and the section entitled "Voting Securities, Principal Holders Thereof and Holdings by Certain Executive Officers" contained in the Company's Annual Meeting Proxy Statement, to be filed pursuant to Regulation 14A. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated by reference to the section entitled "Certain Transactions" contained in the Company's Annual Meeting Proxy Statement, to be filed pursuant to Regulation 14A. - 32 - 33 PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. Financial Statements No financial statements have been filed as a part of this report other than those incorporated by reference in Item 8.
2. Financial Statement Schedules Page(s) ------- Report of Independent Accountants on Financial Statement Schedules . . . . . . . 23 II. Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . 24 III. Real Estate and Accumulated Depreciation . . . . . . . . . . . . . 25-28 IV. Mortgage Loans on Real Estate . . . . . . . . . . . . . . . . . . 29-31
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions, are inapplicable or have been disclosed in the notes to consolidated financial statements, and therefore, have been omitted. 3. Exhibits Exhibits required as part of this report are listed in the index appearing on Pages 36 through 40. EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS 1988 Stock Option Plan - Form 10-K for fiscal year ended December 31, 1988, Exhibit 10.13 1992 Equity Incentive Plan - Registration Statement No. 33-48695, Exhibit 4.3 Trustee Retirement Plan - Filed herewith Employment Agreement with - Form 10-Q for fiscal quarter ended March 31, 1993, Exhibit Abraham D. Gosman 10.1
(b) The Company did not file any reports on Form 8-K during the quarter ended December 31, 1995. - 33 - 34 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MEDITRUST By:/s/ Lisa P. McAlister --------------------------- Chief Financial Officer and Treasurer (and Principal Financial and Accounting Officer) Dated: February 29, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name Title Date ---- ----- ---- /s/ Abraham D. Gosman Chairman, Chief Executive February 29, 1996 - -------------------------------- Abraham D. Gosman Officer and Trustee /s/ David F. Benson President and February 29, 1996 - -------------------------------- David F. Benson Trustee /s/ Edward W. Brooke Trustee February 29, 1996 - -------------------------------- Edward W. Brooke /s/ Robert Cataldo Trustee February 29, 1996 - -------------------------------- Robert Cataldo /s/ Philip L. Lowe Trustee February 29, 1996 - -------------------------------- Philip L. Lowe /s/ Thomas J. Magovern Trustee February 29, 1996 - -------------------------------- Thomas J. Magovern /s/ Gerald Tsai, Jr Trustee February 29, 1996 - -------------------------------- Gerald Tsai, Jr. /s/ Frederick W. Zuckerman Trustee February 29, 1996 - -------------------------------- Frederick W. Zuckerman
- 34 - 35 The Declaration of Trust establishing Meditrust dated August 6, 1985 (the "Declaration"), a copy of which is duly filed in the office of the Secretary of State of the Commonwealth of Massachusetts, provides that the name "Meditrust" refers to the Trustees under the Declaration collectively as Trustees, but not individually or personally; and that no Trustee, officer, shareholder, employee or agent of the Company shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, the Company. All persons dealing with the Company, in any way, shall look only to the assets of the Company for the payment of any sum or the performance of any obligation. - 35 - 36 EXHIBITS
Exhibit No Title Method of Filing ------- ----- ---------------- 3.1 Restated Declaration of Trust, as amended ................................ Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed October 19, 1994 3.2 By-Laws, as amended .................... Incorporated by reference to Exhibit 3.2 to Form 10-K for the fiscal year ended December 31, 1992 4.1 1988 Stock Option Plan, as amended ..... Incorporated by reference to Exhibit 10.13 to Form 10-K for the fiscal year ended December 31, 1988 4.2 1992 Equity Incentive Plan ............. Incorporated by reference to Exhibit 4.3 to the Registration Statement on Form S-8 (File No. 33-48695) 4.3 Trustee Retirement Plan ................ Filed herewith 4.4 Form of Indenture dated February 4, 1993 between The Company and Fleet National Bank, as trustee .............. Incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 (File No. 33-55386) 4.5 Form of 7% Convertible Debenture due 1998 ................................... Incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-3 (File No. 33-55386) 4.6 Form of Fiscal Agency Agreement dated February 4, 1993 between the Company and Fleet National Bank as fiscal agent .................................. Incorporated by reference to Exhibit 4.5 to Form 10-K for the fiscal year ended December 31, 1993 4.7 Form of 7% Convertible Debenture due 1998 ................................... Incorporated by reference to Exhibit 4.6 to Form 10-K for the fiscal year ended December 31, 1993 4.8 Form of Fiscal Agency Agreement dated November 15, 1993 between the Company and Fleet National Bank as fiscal agent .................................. Incorporated by reference to Exhibit 4.7 to Form 10-K for the fiscal year ended December 31, 1993
- 36 - 37
Exhibit No Title Method of Filing ------- ----- ---------------- 4.9 Form of 6 7/8% Convertible Debenture due 1998 ............................... Incorporated by reference to Exhibit 4.8 to Form 10-K for the fiscal year ended December 31, 1993 4.10 Form of Indenture dated April 23, 1992 between The Company and Fleet National Bank, as trustee.. ..................... Incorporated by reference to Exhibit 4 to the Registration Statement on Form S-3 (File No. 33-45979 4.11 Form of 9% Convertible Debenture due 2002 ................................... Incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-3 (File No. 33-45979) 4.12 Form of Indenture dated March 9, 1994 between the Company and Shawmut Bank as Trustee ............................. Incorporated by reference to Exhibit 4 to the Registration Statement on Form S-3 (File No. 33-50835) 4.13 Form of 7 1/2% Convertible Debenture due 2001 ............................... Incorporated by reference to Exhibit 4 to the Registration Statement on Form S-3 (File No. 33-50835) 4.14 Form of Second Supplemental Indenture dated as of July 28, 1995 between the Company and Fleet National Bank, as trustee ................................ Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated July 27, 1995 4.15 Form of 8.54% Convertible Senior Note due July 1, 2000 ....................... Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated July 27, 1995 4.16 Form of 8.56% Convertible Senior Note due July 1, 2002 ....................... Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated July 27, 1995
- 37 - 38
Exhibit No Title Method of Filing ------- ----- ---------------- 4.17 Form of Distribution Agreement dated August 10, 1995 between the Company, Goldman, Sachs & Co. and other underwriters relating to $200,000,000 of Medium-term Notes .................... Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated August 8, 1995 4.18 Form of Third Supplemental Indenture dated as of August 10, 1995 between the Company and Fleet National Bank ..... Incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated August 8, 1995 4.19 Form of Fixed Rate Senior Medium-term Note .................................... Incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K dated August 8, 1995 4.20 Form of Floating Rate Medium-term Note .................................... Incorporated by reference to Exhibit 4.4 to the Company's Current Report on Form 8-K dated August 8, 1995 4.21 Form of First Supplemental Indenture dated as of July 26, 1995 between the Company and Fleet National Bank ......... Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated July 13, 1995 4.22 Form of 7.375% Note due July 15, 2000 ... Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated July 13, 1995 4.23 Form of 7.60% Note due July 15, 2001 .... Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated July 13, 1995
- 38 - 39
Exhibit No Title Method of Filing - ------- ----- ---------------- 10.1 Note Agreement relating to first mortgage notes due December 1, 1997 .... Incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-11 (File No. 33-20557) 10.2 Amended and Restated Lease Agreement between Mediplex of Queens, Inc. and QPH, Inc. dated December 30, 1986 ...... Incorporated by reference to Exhibit 2.2 to the Form 8-K dated January 13, 1987 10.3 Form of Lease for Carmel, New York and Scotia, New York facilities ............ Incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-11 (File No. 33-7483) 10.10 Amended and Restated Revolving Credit Agreement dated as of July 21, 1995 between the Company and Via Banque ...... Incorporated by reference to Exhibit 10.2 to Form 10-Q for the fiscal quarter ended September 30, 1995. 10.12 Amended and Restated Revolving Credit Agreement dated July 21, 1995 among the Company, various financial institutions and Fleet Bank, National Association and First Union National Bank of North Carolina, as Agents ....... Incorporated by reference to Exhibit 10.1 to Form 10-Q dated October 20, 1995 11 Statement Regarding Computation of Per Share Earnings .......................... Filed herewith 21 Subsidiaries of the Registrant .......... Filed herewith
- 39 - 40
Exhibit No Title Method of Filing - ------- ----- ---------------- 23 Consent of Coopers & Lybrand L.L.P. ..... Filed herewith
- 40 - EX-4.3 2 TRUSTEE RETIREMENT PLAN 1 EXHIBIT 4.3 MEDITRUST TRUSTEE RETIREMENT PLAN Meditrust 197 First Avenue Needham, Massachusetts 02194 2 MEDITRUST TRUSTEE RETIREMENT PLAN Effective: January 22, 1995 1. PURPOSES. The purposes of the Meditrust Trustee Retirement Plan (the "Plan") are to further the growth and development of Meditrust (the "Company") by providing certain retirement benefits to those members of the Company's Board of Trustees (the "Board") who have provided substantial services to the Company and thereby to attract talented individuals to serve on the Board and provide an additional incentive to continued participation on the Board. 2. Administration. -------------- (a) ADMINISTRATOR. The Plan shall be administered by the Board's Personnel and Compensation Committee (the "Committee"). The Committee shall have full authority to interpret the Plan, to adopt, amend and rescind rules and regulations for the administration of the Plan and to decide all disputes arising in connection with the Plan. Notwithstanding such delegation, the Board of Trustees may take any action regarding the Plan. (b) PROCEDURE. With respect to the Plan, the Committee shall act by a majority (but not less than two) of its members; provided, always, that no member of the Committee shall vote or decide upon any matter relating to himself as a member, but all such matters shall be voted or decided by the other members of the Committee and the vote, decision or determination of such other members, shall be final, binding and conclusive upon such interested member of the Committee. A formal meeting of the Committee need not be called or held for the purpose of making any decision, but decisions may be made and evidenced by a written document signed by a majority of the Committee. 3. PARTICIPANTS. Trustees of the Company at any time after the date hereof, who are not employees of the Company immediately prior to their retirement from the Board who have served on the Board for a minimum of five years and have retired from service on the Board (collectively, the "Participants" and individually, a "Participant") shall be eligible to receive benefits under the Plan as provided hereinafter. 4. RETIREMENT BENEFITS. A Participant's entitlement to retirement benefits shall commence on the later to occur of (a) the first anniversary of the date of retirement of such Participant from the Board and (b) the 65th birthday of such Participant (or such earlier birthday as may be determined by the Committee); provided, however, that a Participant's entitlement to the retirement benefits shall commence immediately upon a Participant's retirement (i) as a result of medical disability or (ii) following a recommendation by the Nominating Committee that such Participant not be nominated for re-election, or (iii) following his failure to be reelected as a Trustee after having been nominated for reelection by the Nominating Committee (the "Commencement Date"). 3 The retirement benefits shall be paid for a number of years equal to the number of years that such Participant served on the Board. Payments shall be made in annual installments payable during the second fiscal quarter following the Commencement Date in shares of beneficial interest of the Company ("Shares") having a fair market value at the close of business on the first business day of the quarter in which it is paid equal to (a) the amount of the basic Trustee fees (excluding fees for attendance at Board and committee meetings, bonuses, incentive compensation, commissions, special project compensation and any other form of additional compensation) paid or payable by the Company to such Participant for such Participant's last full calendar year of service on the Board, plus (b) the amount which would have been payable by the Company to such Participant for attendance at six Board meetings during such year. For purposes of payments to Participants under the Plan, the "fair market value" of a Share shall be (i) the closing price of Shares on the New York Stock Exchange, or (ii) if the Shares are not listed on such exchange, the closing price on any other national exchange on which the Shares are listed or on NASDAQ, or (iii) if the Shares are not listed on any national exchange or NASDAQ, then as determined by the Committee in good faith. 5. DEATH OF A PARTICIPANT. With respect to Participants serving on the Board on the effective date of the Plan, benefits shall be payable under the Plan after the death of any such Participant to the Participant's estate or to such other beneficiary as shall have been designated by the Participant in writing. With respect to all other Participants, all benefits under the Plan shall terminate as of the death of any such Participant and no benefits shall be payable thereafter. 6. REMOVAL FROM BOARD. In the event a Participant is removed from the Board, with or without cause, such Participant shall not be entitled to any benefits under the Plan, except as the Committee may determine in its sole discretion. 7. Amendment and Termination. ------------------------- (a) AMENDMENT. The Company shall have the right, at any time and from time to time, to modify or amend the Plan or any of its provisions, each such modification or amendment to be by instrument in writing executed by the Company, provided that no benefits then accrued hereunder to any Participant shall be reduced or impaired without his consent. (b) TERMINATION. Although the Company expects to continue the Plan indefinitely, it expressly reserves the right to terminate it in whole or in part at any time by instrument in writing, such termination to be effective on the date specified in such instrument, provided that no benefits then accrued hereunder to any Participant shall be reduced or impaired without his consent. -2- 4 8. Miscellaneous Provisions. ------------------------ (a) NON-ALIENABILITY OF BENEFITS. No right or claim to any of the benefits hereunder shall be assignable by any Participant, nor shall such rights or claims be subject to garnishment, attachment, execution or levy of any kind; and any attempt so to assign, transfer, pledge, encumber, commute or anticipate the same shall be void. (b) RIGHTS OF PARTICIPANTS AND OTHERS. Nothing contained herein shall be deemed to give any Participant the right to be retained on the Board, or confer upon or create in any Participant or other person any right of any name or nature, legal or equitable, except such as are expressly set forth herein. Neither anything contained herein nor any action taken by the Company hereunder shall in any way prevent it from removing at any time any Trustee present or future from the Board, or subject it to any liability for such removal. Nor shall it be deemed to give the Company the right to require the Participant to remain in its service, or interfere with the Participant's right to terminate his service at any time. (c) RELEASE BY PARTICIPANTS, ETC. Any payment to a Participant or to any person entitled to a benefit under the Plan, made in accordance with the provisions of the Plan, shall to the extent thereof be in full satisfaction of any and all claims against the Company and the Committee. Such Participant or person may be required, as a condition precedent to such payment, to execute a receipt and release thereof in such form as may be determined by the Company or the Committee, as the case may be. (d) GOVERNING LAW. To the extent permitted by federal law, the Plan shall be construed and the rights and liabilities of all persons hereunder determined in accordance with the laws of the Commonwealth of Massachusetts. -3- EX-11 3 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS 1 MEDITRUST EXHIBIT 11 STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Year ended December 31, ----------------------------------------- Primary 1995 1994 1993 ======= ----- ----- ----- Weighted average shares 47,563 35,314 31,310 Dilutive effect of: Stock options 136 88 119 Warrants 21 62 -------- ------- ------- Weighted average number of shares and equivalent shares outstanding 47,699 35,423 31,491 ======== ======= ======= Net income before extraordinary item $119,972 $80,460 $63,636 Extraordinary item 33,454 -------- ------- ------- Net income (loss) $ 86,518 $80,460 $63,636 ======== ======= ======= Per Share amounts: Net income per share (A) $ 2.52 $ 2.27 $ 2.02 Extraordinary item: Loss on prepayment of debt 0.70 -------- ------- ------- Net income (loss) $ 1.82 $ 2.27 $ 2.02 ======== ======= ======= (A) This calculation is submitted in accordance with Regulation S-K item 601 (b) (11) although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
Fully Diluted ============= Weighted average number of shares used in primary calculation 47,563 35,423 31,491 Assumed conversion of convertible debentures 7,574 7,060 5,246 Dilutive effect of: Stock options 209 -------- ------- ------- Fully diluted weighted average shares and equivalent shares outstanding 55,346 42,483 36,737 ======== ======= ======= Net income before extraordinary item $119,972 $80,460 $63,636 Interest and debt amortization on assumed conversion of debentures 20,710 18,632 12,352 -------- ------- ------- Adjusted net income before extraordinary item 140,682 99,092 75,988 Extraordinary item 33,454 -------- ------- ------- Net income (loss) $107,228 $99,092 $75,988 ======== ======= ======= Per Share amounts: Net income per share (B) $ 2.54 $ 2.33 $ 2.07 Extraordinary item: Loss on prepayment of debt 0.60 -------- ------- ------- Net income (loss) $ 1.94 $ 2.33 $ 2.07 ======== ======= ======= (B) This calculation is submitted in accordance with Regulation S-K item 601(b) (11) although it is contrary to paragraph 40 of APB Opinion No. 15 because it produces an anti-dilutive result.
- 41 - EX-21 4 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT MEDITRUST SUBSIDIARY CORPORATIONS AS OF DECEMBER 31, 1995
State of Name Incorporation - ---- ------------- Meditrust Acquisition Corporation Massachusetts Meditrust of Alabama, Inc. Alabama Meditrust at Alpine, Inc. Pennsylvania Meditrust of Arizona, Inc. Delaware Meditrust of Arkansas, Inc. Arkansas Meditrust of Arlington, Texas, Inc. Massachusetts Meditrust of Bakersfield, California, Inc. Delaware Meditrust of Baton Rouge, Inc. Louisiana Meditrust of Benton, Inc. Delaware Meditrust of California, Inc. Delaware Meditrust of College Station, Inc. Delaware Meditrust of Colorado, Inc. Delaware Meditrust of Connecticut, Inc. Delaware Meditrust Depository Corporation Delaware Meditrust Finance Corporation Delaware Meditrust Financial Services Corporation Delaware Meditrust of Florida, Inc. New York Meditrust of Bedford, Inc. Delaware Meditrust of Houston, Inc. Massachusetts Meditrust of Illinois, Inc. Illinois Meditrust of Kansas, Inc. Kansas Meditrust of Kentucky, Inc. Delaware Meditrust of Los Angeles, Inc. Delaware Meditrust of Louisiana, Inc. Louisiana Meditrust of Lynn, Inc. Delaware Meditrust Management Corp. Delaware Meditrust of Maryland, Inc. Delaware Meditrust of Massachusetts, Inc. Delaware
- 42 - 2 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT MEDITRUST SUBSIDIARY CORPORATIONS (CONTINUED) AS OF DECEMBER 31, 1995`
State of Name Incorporation - ---- ------------- Meditrust at Mountainview, Inc. Pennsylvania Meditrust of Michigan, Inc. Delaware Meditrust of Missouri, Inc. Delaware Meditrust Mortgage Investments, Inc. Delaware Meditrust of New Bedford, Inc. Delaware Meditrust of New Hampshire, Inc. Delaware Meditrust of New Jersey, Inc. Delaware Meditrust of New York, Inc. Delaware Meditrust of Ohio, Inc. Delaware Meditrust Tri-States, Inc. Delaware New England Finance Corporation Delaware Pacific Finance Corporation Delaware Meditrust of San Antonio, Inc. Delaware Meditrust of Texas, Inc. Delaware Meditrust of Washington, Inc. Delaware Meditrust of West Virginia, Inc. Delaware Meditrust of Wyoming, Inc. Delaware
- 43 - EX-23 5 CONSENT OF COOPERS & LYBRAND LLP 1 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Meditrust on Form S-8 (File Nos. 33-25072, 33-49218 and 33-57377) and on Form S-3 (File Nos 33-40005, 33-40926, 33-42596, 33-43931, 33-45979, 33-48695 and 33-59215) of our reports dated January 29, 1996 on our audits of the consolidated financial statements and financial statement schedules of Meditrust as of December 31, 1995 and 1994 and for the years ended December 31, 1995, 1994 and 1993, which reports are included or incorporated by reference in this Annual Report on Form 10-K. Our report on the 1995 consolidated financial statements of Meditrust appears in Meditrust's Current Report on Form 8-K, dated January 29, 1996. /s/ Coopers & Lybrand L.L.P. Boston, Massachusetts February 29, 1996 - 44 - -----END PRIVACY-ENHANCED MESSAGE-----