Abandoning efforts to diversify, Meditrust said Thursday it would break into two real estate investment trusts, one focusing on health care properties and the other on hotels.
The company also said it will sell up to $1 billion of its $7 billion in assets, such as its Santa Anita racetrack in California and golf courses, about half of which will be used to pay down Meditrust's nearly $3.3 billion in debt. The REIT will also trim its dividend by 26 percent, to about $1.84 a share in 1999, down from the current $2.48.
The breakup will result in up to $448 million in charges, $248 million of which were taken in the third quarter, the company said.
In the third quarter, Meditrust also reported, funds from operations rose to $88.5 million from $48.8 million a year earlier. Because of an increase in shares, however, operating funds fell to 60 cents a share from 66 cents, under the 67 cents expected by analysts surveyed by First Call Corp.
In 1997, Meditrust undertook an effort to lift profits by expanding into into hotels and golf courses. Previously, the company had concentrated on health-care properties.
That effort fizzled, however, in large part because of changes in federal regulations governing REITS - and so did the company's stock. It's off more than 50 percent from its 52-week high of 39 1/8. With its latest move, Meditrust hopes to recover and regain momentum.
"Meditrust has redefined itself and is dedicated to focusing on its strengths in healthcare financing and lodging," said Thomas M. Taylor, the interim chairman, in a press release. "These are businesses we know best."
Taylor replaced company founder Abraham Gosman last summer, who resigned in light of the REIT's troubles.
Written By Jeffry Bartash