The renaming carries no internal restructuring of the paired-share REIT, Temple Weiss of Meditrust's investor relations, tells GlobeSt.com. The financial action is, he says, "the last big piece that everyone was waiting to see in the turnaround of Meditrust."
The credit facility replaces one that was due to expire July 17 and carrying a 9 1/2% interest. "We had to get another in place before then," explains Weiss. As a result, liquidity is just around the corner, he claims.
The newly floated credit facility matures May 31, 2003, but includes an extension option. Co-lead arrangers are CIBC World Markets Corp. and Fleet Securities Inc. Lehman Brothers and J.P. Morgan Chase & Co. have acted as co-documentation agents for the deal.
The REIT will be able to satisfy all debt for this year and is on track to handle another $62 million in debt that comes due in 2002, Weiss assures GlobeSt.com. According to a press release, the REIT now has $135 million of remaining 2001 debt maturities and $169 million of cash-on-hand and no current borrowing against the $200-million credit line. "The story is we now have a facility in place and money in the register to pay off all debt," Weiss says of this year's fiscal picture.
Health-care asset sales in recent months have reduced bank term debt maturities from $86 million in April to $44 million as of June 8. The ongoing disposition program has enabled Meditrust to slash debt by more than $1 billion in the past 1 1/2 years.
The name change, says Weiss, results from the REIT's refocus to the lodging industry. The La Quinta component accounts for more than 80% of the REIT's portfolio and 80% of the generated revenue. La Quinta owns, operates or franchises 229 Inns and 71 Inn & Suites in a 28-state portfolio.
The health-care exit and shift to the hotel industry is bolstered by La Quinta's showing in the past two reporting periods, in which RevPar growth had been demonstrated for the first time in two years. Weiss says the repositioning does not mean that La Quinta Properties "will run out and use up capital. The continued growth will come from the franchises and internally...getting the most out of revenues and cost control."
Under the moniker change, the Meditrust Cos. becomes La Quinta Properties Inc. and Meditrust Operating Co. will be known as La Quinta Corp. They will still trade as a paired-share REIT. The change takes effect around June 20 and a new ticker symbol will be rolled into place.
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