Strawberry Fields REIT Q3 Earnings Call Highlights

Key Points

• Q3 net loss was driven by a one-time currency hit: Strawberry Fields reported a $14.8 million loss, including a $24.6 million foreign-currency transaction loss tied to bond redemptions. Excluding that item, quarterly net income would have been about $9.8 million; revenue rose to $40 million and the company collected all contractual rent.
• Acquisitions and a potential sale are expected to support growth: Management expects to close about $123 million of acquisitions by year-end, partly funded by an anticipated $90 million Arkansas property sale. After the sale and purchases, annual rent is projected to increase by roughly $3 million to $4 million.
• The company projected 2026 AFFO of $74.5 million and 10.1% AFFO-per-share growth, and approved an unchanged quarterly dividend of $0.17 per share.

Strawberry Fields REIT NYSEAMERICAN: STRW reported a third-quarter net loss after recognizing a foreign currency transaction loss tied to bond redemptions, while executives outlined plans to fund acquisitions partly with proceeds from a potential Arkansas property sale.

The company collected 100% of its contractual rent during the quarter and expects to close approximately $123 million of acquisitions by year-end from a $400 million pipeline, Chief Investment Officer Jeff Bajtner said on the earnings call. Those purchases remain subject to closing and, in one case, further due diligence.

The board also approved a fourth-quarter dividend of $0.17 per share, unchanged from the prior level. It is payable Dec. 30 to shareholders of record on Dec. 16.

Currency Loss Weighs on Results

Third-quarter revenue was $40 million, up $0.3 million from a year earlier, Chief Financial Officer Greg Flamion said. Operating expenses fell $0.6 million as lower amortization and property tax expenses partly offset higher general and administrative costs.

The company reported a net loss of $14.8 million, primarily reflecting a $24.6 million foreign currency transaction loss associated with the redemption of its ILS 3-denominated bond series. Excluding that loss, Flamion said quarterly net income would have been approximately $9.8 million, about $1 million higher than a year earlier.

For the first nine months of 2026, revenue rose 4.5% to $120 million, driven by contributions from properties acquired in 2025. Net income declined to $3.7 million from $24.5 million in the comparable prior-year period. Excluding the currency loss, Flamion said, nine-month net income would have been approximately $28.3 million.

Chairman and CEO Moishe Gubin described the currency loss as a one-time event. He said the company chose alternative financing after rates quoted in Israel were higher, estimating that the replacement borrowing cost was nearly two percentage points lower.

Flamion said the company projects 2026 adjusted funds from operations, or AFFO, of $74.5 million and AFFO-per-share growth of 10.1%. Gubin said nine-month AFFO was $55.9 million, approximately $2.5 million higher than a year earlier. AFFO is a non-GAAP measure.

Acquisitions and Potential Sale

Strawberry Fields completed the $10.4 million purchase of a hospital campus near Kansas City, Missouri, on Sept. 9. The campus includes a licensed 60-bed hospital, a 99-bed skilled nursing facility and ancillary medical office buildings. It was added to an existing tenant’s master lease, with initial annual base rent of $1.04 million and 3% annual increases, Bajtner said.

After the quarter, the company agreed to buy a 99-bed skilled nursing facility in Angola, Indiana, for $15 million. It expects to fund $14 million from its balance sheet, with the seller receiving $1 million in operating partnership units. The property is expected to close before year-end and be added to an existing tenant’s master lease, with initial annual base rent of $1.5 million and 3% annual increases.

Gubin said a tenant has exercised an option to purchase Arkansas facilities for $90 million. The sale was awaiting a government letter and could close as soon as the following week, he said. The company plans to use a 1031 exchange to reinvest proceeds, and Gubin estimated net cash from the transaction at approximately $83 million.

Alongside the sale proceeds, Strawberry Fields expects to borrow about $43 million against an acquisition in a new state. Gubin said that borrowing would help maintain the prospective tenant’s reimbursement rate and, together with the sale proceeds, would be sufficient to fund the planned year-end deals.

After accounting for rent lost from the Arkansas sale and rent from the expected acquisitions, Gubin estimated annual rent would rise by roughly $3 million to $4 million. He said the company expects to remain below 50% leverage after the purchases, within its stated policy range of 45% to 55%.

Pipeline Extends Into 2027

Among the year-end opportunities is a Florida sale-leaseback. Gubin said the arrangement could expand into a seven-facility master lease over the following 18 months, although that outcome remains an expectation rather than a completed transaction.

Management also discussed a larger potential portfolio acquisition for the first quarter of 2027. Gubin said it was not yet under contract and could require a capital raise, depending in part on the share price and leverage. If completed, he said, it could bring the company above $2 billion in assets based on market value.

For the remaining year-end deals, Gubin characterized the Florida and Indiana transactions as ready to proceed, subject to timing. A separate portfolio still requires his property visit and additional financial detail for the prospective tenant, he said.

The company’s portfolio currently comprises 145 facilities in 10 states with 15,655 licensed beds, according to Bajtner. He reported rent coverage of 2.24 times and a weighted-average lease term of 6.8 years.

About Strawberry Fields REIT (NYSEAMERICAN:STRW)

Strawberry Fields REIT, Inc is a healthcare real estate investment trust that owns and manages properties used primarily by skilled nursing and other long-term care operators. The company generates revenue mainly by leasing its healthcare facilities to tenants under long-term, generally triple-net lease agreements, under which tenants are typically responsible for property operating expenses, maintenance and taxes.

The company's portfolio is focused on healthcare properties in the United States, with an emphasis on skilled nursing facilities and related senior-care real estate.

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