Meditrust Will Reorganize, Sell Santa Anita Track

Meditrust Cos. announced a sweeping corporate restructuring and asset sale Thursday to help pay down its crushing debt load and boost its stock price, which has dropped 57% in the last year.

The Needham Heights, Mass.-based real estate investment trust also acknowledged that it will sell the 64-year-old Santa Anita racetrack, but declined to reveal a buyer or price.

Frank Stronach, owner of Canadian auto parts maker Magna International, said last week that he intended to buy the track and was talking to William C. Baker, Santa Anita chairman and chief executive, about playing some role in the new ownership group.

Under the restructuring, Meditrust will split into a $2.5-billion REIT focused on health-care properties and a $2.5-billion REIT holding hotel properties.

It will sell $1 billion in assets, including its golf course business. It will use the proceeds to pay down more than half a billion dollars in near-term debt. It will also cut its dividend to $1.84 a share. The restructuring will result in $448 million in charges.

Despite the restructuring news, Standard & Poor’s Corp. lowered Meditrust’s credit rating to below-investment grade, saying the company made “a string of acquisitions which were aggressively priced and ultimately more highly leveraged than initially expected.” Moody’s Investors Service also cut Meditrust’s rating to “junk.”

Meditrust shares fell 19 cents to close at $15.81 on the New York Stock Exchange.

Meditrust bought Santa Anita Cos. last year for $458 million because Santa Anita was one of only five REITs that had a special “paired share” status, which allowed it to avoid corporate income tax and to both own properties and run businesses. But that status was soon worth far less than the $200 million analysts estimate the company paid for it. A law passed in July precluded it from using this structure for further purchases.