Meditrust Expected to Reorganize, Split in Two, Analysts Say
Needham Heights, Massachusetts, Nov. 11 (Bloomberg) -- MediTrust Cos. could announce as early as tomorrow that it is splitting into a real estate investment trust owning health-care properties and a corporation owning hotels and golf courses, analysts said.
''We expect some sort of announcement that includes the division of their assets,'' said Jay Leupp, an analyst at BancBoston Robertson Stephens.
Shares of Meditrust, a REIT, are down 56 percent this year after it tried to expand into lodging and golf courses from its main business of owning and financing health-care properties. The company has also been hurt by a new tax law curtailing the growth of so-called paired-share REITs.
The company is scheduled to report third-quarter earnings tomorrow.
Analysts said that they also expect the company to cut its dividend payments to conserve cash. The regular cash dividend for last year was $2.485 a share. Company officials weren't immediately available to comment
The expected moves would come amid the most turbulent time in the company's 13-year history. Its stock, at 16, is down from a 52-week high of 39 in December amid concerns about the timing of the company's diversification strategy, as well as a new tax law that does away with the REIT's special paired-share tax status.
The company last year became one of four public paired-share REITs through the purchase of Santa Anita Realty Cos., the owner and operator of the Santa Anita thoroughbred racetrack in Arcadia, California.
Meditrust bought Santa Anita for its paired share structure, which lets it engage in non-real estate businesses without violating U.S. tax rules governing the amount of income REITs can generate from these activities. Analysts estimated about $200 million of the $458 million purchase price was related to the structure.
Meditrust hoped to pursue a plan to invest in businesses and industries with prospects for faster growth than health-care property financing. Meditrust soon bought La Quinta Inns Inc. for $2.65 billion and scooped up golf course owners and operators.
The strategy was halted when the U.S. President Bill Clinton signed new legislation that limits the ability of paired-share REITs to put new acquisitions into the structure. The new law rendered the structure worthless.
Meditrust's troubles led to the resignation this summer of Abraham Gosman, the company's founder, chairman and chief executive. Thomas Taylor, who heads an investment firm that represents the Bass family and which holds an 8.7 percent stake in Meditrust, took over as interim chairman.
Meditrust, with $3.96 billion in assets, has investments in 470 health-care facilities in 40 states.
20:03:10 11/11/1998
Any redistribution of Bloomberg content, including by framing or similar means, is expressly prohibited without the prior written consent of Bloomberg L.P. Any reference to the material must be properly attributed to Bloomberg News.
The information herein was obtained from sources which Bloomberg L.P. and its suppliers believe reliable, but they do not guarantee its accuracy. Neither the information, nor any opinion expressed, constitutes a solicitation of the purchase or sale of any securities or commodities.(C) Copyright 1998 Bloomberg L.P. BLOOMBERG, Bloomberg News, Bloomberg Financial Markets, Bloomberg Television, Bloomberg News Radio are trademarks, tradenames and service marks of Bloomberg L.P. |
