Core Insights - Strawberry Fields REIT, Inc. (STRW) and National Health Investors (NHI) are being compared for their value to investors, with STRW currently showing a stronger potential for value investment [1][3]. Valuation Metrics - STRW has a forward P/E ratio of 8.01, significantly lower than NHI's forward P/E of 15.09, indicating STRW may be undervalued [5]. - The PEG ratio for STRW is 1.00, while NHI's PEG ratio is 4.28, suggesting STRW has a better balance between price and expected earnings growth [5]. - STRW's P/B ratio stands at 1.43 compared to NHI's 2.3, further supporting STRW's position as a more attractive value option [6]. Analyst Ratings - STRW holds a Zacks Rank of 1 (Strong Buy), while NHI has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision trend for STRW [3]. - STRW's solid earnings outlook and superior valuation metrics contribute to its Value grade of A, whereas NHI has a Value grade of D [6].

Core Viewpoint - The article discusses the investment position of the author in STRW shares, indicating a beneficial long position through various means such as stock ownership and derivatives [1]. Group 1 - The author expresses personal opinions regarding the investment in STRW and clarifies that no compensation is received for the article, aside from Seeking Alpha [1]. - The article emphasizes that it should not be considered financial advice, as the author is not a licensed financial advisor [2]. - It highlights the importance of due diligence and research by investors before making any investment decisions, particularly in high-risk trading styles [2]. Group 2 - The article notes that past performance does not guarantee future results, and no specific investment recommendations are provided [3]. - It mentions that the views expressed may not reflect those of Seeking Alpha as a whole, indicating a diversity of opinions among analysts [3]. - The article clarifies that the authors are third-party contributors, which may include both professional and individual investors without necessary licenses [3].

[PART I Financial Information](index=4&type=section&id=PART%20I%20Financial%20Information) [Item 1. Condensed Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Financial%20Statements) Presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, including balance sheets, income statements, equity, cash flows, and accompanying notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Highlights ($000s) | Balance Sheet Highlights ($000s) | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$834,847** | **$787,589** | | Real estate investments, net | $629,376 | $609,058 | | Cash and cash equivalents | $42,314 | $48,373 | | **Total Liabilities** | **$747,655** | **$704,018** | | Bonds, net | $206,188 | $209,944 | | Notes payable and other debt | $506,214 | $460,591 | | **Total Equity** | **$87,192** | **$83,571** | - Total assets increased by **$47.3 million**, primarily driven by growth in real estate investments and intangible assets, while total liabilities rose by **$43.6 million** due to an increase in notes payable and other debt[10](index=10&type=chunk) [Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Income Statement Highlights ($000s) | Income Statement Highlights ($000s) | Q1 2025 | Q1 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Rental revenues | $37,333 | $27,834 | +34.1% | | Total expenses | $17,127 | $13,549 | +26.4% | | Income from operations | $20,206 | $14,285 | +41.5% | | Total interest expense | $13,223 | $8,293 | +59.5% | | Net income | $6,991 | $5,992 | +16.7% | | Net income attributable to common stockholders | $1,584 | $746 | +112.3% | | Basic and diluted EPS | $0.13 | $0.12 | +8.3% | - The significant increase in rental revenues was a primary driver of improved operating income, though a sharp **59.5% rise in total interest expense** partially offset these gains[13](index=13&type=chunk) [Condensed Consolidated Statements of Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) - Total equity increased from **$83.6 million** at December 31, 2024, to **$87.2 million** at March 31, 2025[16](index=16&type=chunk) - Key changes in equity during Q1 2025 included net income of **$7.0 million** and a **$4.1 million** positive foreign currency translation adjustment, offset by **$1.7 million** in dividends and **$6.0 million** in distributions to non-controlling interests[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary ($000s) | Cash Flow Summary ($000s) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $18,966 | $2,125 | | Net cash used in investing activities | $(28,763) | $(17,574) | | Net cash (used in) provided by financing activities | $(12,773) | $16,422 | | **Net Change in Cash** | **$(22,570)** | **$973** | - Operating cash flow saw a substantial year-over-year increase, rising to **$19.0 million** from **$2.1 million**[18](index=18&type=chunk)[223](index=223&type=chunk) - Investing activities primarily consisted of **$29.0 million** for the purchase of real estate investments[18](index=18&type=chunk)[224](index=224&type=chunk) - Financing activities reflected a net cash outflow, driven by distributions, debt repayments, and dividends, which were partially offset by **$2.2 million** in proceeds from ATM stock sales[18](index=18&type=chunk)[225](index=225&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - As of March 31, 2025, the Company's portfolio grew to **120 owned healthcare properties** and one leased property, up from 113 owned properties at the end of 2024[23](index=23&type=chunk) - In Q1 2025, the Company acquired 6 facilities in Kansas for **$24.0 million** and one facility in Oklahoma for **$5.0 million**, and entered into a new master lease for 10 Kentucky properties involving a new **$50.9 million** note payable[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - Total gross debt increased to **$715.5 million** as of March 31, 2025, from $673.9 million at year-end 2024[90](index=90&type=chunk) - As of March 31, 2025, **67 out of 132 tenants were related parties**, contributing **$17.4 million** in rental income for the quarter[177](index=177&type=chunk)[181](index=181&type=chunk) - Subsequent to the quarter's end, on April 4, 2025, the Company acquired a skilled nursing facility near Houston, Texas for **$11.5 million**[191](index=191&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q1 2025 financial performance, focusing on revenue growth from acquisitions, portfolio expansion, interest expense impacts, liquidity, and non-GAAP reconciliations [Overview and Recent Developments](index=40&type=section&id=Overview%20and%20Recent%20Developments) - The company's portfolio expanded to **121 healthcare properties** with 14,640 licensed beds across 11 states[199](index=199&type=chunk) - Key acquisitions in Q1 2025 include six facilities in Kansas for **$24.0 million** and one facility in Oklahoma for **$5.0 million**[204](index=204&type=chunk)[205](index=205&type=chunk) - Subsequent to the quarter, the company acquired a facility in Texas for **$11.5 million** on April 4, 2025[206](index=206&type=chunk) - As of the report date, **none of the company's tenants were delinquent** on rent payments[207](index=207&type=chunk) [Results of Operations](index=42&type=section&id=Results%20of%20Operations) - Rental revenues increased by **34.1% YoY to $9.5 million**, primarily due to new master leases in Kentucky, Missouri, and Kansas[209](index=209&type=chunk) - Depreciation and amortization expenses rose due to properties purchased in 2024 and Q1 2025, and new intangible assets related to the Kentucky Master Lease[210](index=210&type=chunk) - Interest expense increased by **63.4% YoY**, driven by higher bond balances, a new note payable, and a new commercial bank loan facility[212](index=212&type=chunk) - Net income attributable to common stockholders more than doubled, increasing **112.3% to $1.6 million** from $0.7 million in the prior-year quarter[209](index=209&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) - As of March 31, 2025, the company had cash, cash equivalents, and restricted cash of **$71.1 million**[215](index=215&type=chunk) - Total indebtedness stood at approximately **$715.5 million**[219](index=219&type=chunk) - The company faces **significant balloon payments** on its debt between 2026 and 2029, including payments of **$81.4 million** for Series A Bonds and **$66.9 million** for Series C Bonds in 2026[220](index=220&type=chunk) [Funds From Operations (FFO)](index=49&type=section&id=Funds%20From%20Operations%20(FFO)) FFO and AFFO Reconciliation ($000s) | FFO and AFFO Reconciliation ($000s) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $6,991 | $5,992 | | Depreciation and amortization | $11,270 | $8,098 | | **Funds from Operations (FFO)** | **$18,261** | **$14,090** | | Straight-line rent adjustment | $(1,457) | $(968) | | **Adjusted Funds from Operations (AFFO)** | **$16,804** | **$13,122** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details the company's primary market risks, including interest rate risk on its variable-rate debt and foreign currency exposure from its Israeli bonds - The primary market risk is identified as **interest rate risk** from long-term debt[254](index=254&type=chunk) - As of March 31, 2025, **$194.4 million**, or **27.2% of total debt**, is floating rate debt tied to the one-month SOFR[255](index=255&type=chunk) - A hypothetical **100 basis point increase** in the one-month SOFR would decrease the company's annual cash flow by approximately **$1.9 million**[255](index=255&type=chunk) - The company is also exposed to **foreign currency risk** from its Israeli Shekel-denominated bonds traded on the TASE[256](index=256&type=chunk)[258](index=258&type=chunk) [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures as of March 31, 2025, with no material changes to internal controls during the quarter - An evaluation led by the CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[260](index=260&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter ended March 31, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[261](index=261&type=chunk) [PART II Other Information](index=52&type=section&id=PART%20II%20Other%20Information) [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) Outlines ongoing litigation related to property acquisitions, which management believes are without merit and will not have a material adverse effect - The company is a defendant in multiple lawsuits filed by Joseph Schwartz and related parties concerning property acquisitions completed between 2018 and 2019[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk) - The plaintiffs' claims include fraud, breach of contract, and rescission related to alleged failure to perform post-closing obligations[266](index=266&type=chunk) - The company and named defendants believe the claims are **without merit** and intend to defend the litigation vigorously, not expecting a material adverse effect[266](index=266&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Repurchases%20of%20Equity%20Securities) Reports that no redemptions of equity securities occurred during the first quarter of 2025 - **No redemptions of equity securities** occurred in the first quarter of 2025[269](index=269&type=chunk)

Group 1 - The article expresses a beneficial long position in the shares of STRW, indicating a positive outlook on the company's stock performance [1] - The author emphasizes that the article is based on personal opinions and does not constitute financial advice, highlighting the importance of individual due diligence for investors [2] - It is noted that past performance does not guarantee future results, and the views expressed may not reflect those of the broader platform [3]

Financial Performance - Rental revenues for the year ended December 31, 2024, increased by 17.3% to $117.1 million compared to $99.8 million in 2023[212] - Net income for 2024 was $26.5 million, reflecting a 30.9% increase from $20.2 million in 2023[212] - Rental revenues increased by $17.2 million or 17.3% in 2024 compared to 2023, driven by lease renegotiations and acquisitions of 15 properties[215] - Net income rose from $20.2 million in 2023 to $26.5 million in 2024, attributed to higher rental revenue and lower losses on real estate[220] - Funds from Operations (FFO) for the year ended December 31, 2024, were $60.2 million, up from $49.5 million in 2023, indicating a year-over-year increase of approximately 21.5%[257] - The Company reported a net income of $26.5 million for the year ended December 31, 2024, compared to $20.2 million in 2023, reflecting a year-over-year increase of approximately 31.5%[257] Expenses and Indebtedness - Total expenses rose by 6.5% to $55.8 million, with significant increases in depreciation (10.8%) and general and administrative expenses (21.0%)[212] - Depreciation increased by $2.8 million or 10.8% due to new real estate investments totaling $119.8 million in 2024[216] - Interest expense increased by $8.1 million or 33.4% due to larger bond balances and a new commercial bank loan[219] - Total indebtedness as of December 31, 2024, was approximately $673.9 million, including $262.2 million in HUD guaranteed debt[226] - The total gross notes payable and other debt increased to $673.9 million as of December 31, 2024, up from $539.1 million in 2023, representing an increase of approximately 24.9%[253] Acquisitions and Investments - The Company completed the acquisition of two skilled nursing facilities for $15.25 million, with an annual base rent of $1.5 million and 3% annual rent increases[204] - A purchase agreement for a property in Indiana was closed for $5.83 million, with a first-year base rent of $15.5 million and 3% annual escalations[200] - The Company acquired six healthcare facilities in Kansas for $24 million, which will be leased under a new 10-year master lease agreement[209] - Cash used in investing activities rose by $30.4 million, mainly due to a $29.8 million increase in property acquisitions[231] Financing and Capital Structure - The Company established an at-the-market equity program to enhance financing flexibility and support growth initiatives[202] - The Company issued Series A Bonds worth approximately $37.1 million at a fixed interest rate of 6.97%[203] - The Company closed a mortgage loan facility on December 19, 2024, borrowing approximately $59 million, with monthly interest payments starting January 2026 and a balloon payment due in December 2029[238] - As of December 31, 2024, the company had $88.5 million in Series A Bonds at a fixed interest rate of 6.97%, $73.3 million in Series C Bonds at 5.7%, $51.5 million in Series D Bonds at 9.1%, and $460.6 million in senior debt notes, with 29.03% of total debt ($195.7 million) bearing a variable interest rate[283] Tenant Performance and Compliance - As of the report date, none of the Company's tenants are delinquent on rent payments, indicating strong lease compliance[210] - The company actively monitors key factors affecting tenant performance, including cash flow, operating margins, and the quality of management teams[279] - The company evaluates tenant creditworthiness through periodic financial statements and operational data, ensuring ongoing monitoring of credit quality[277] - The company determined that no allowance for doubtful accounts was necessary to cover potential rent losses from tenants as of December 31, 2024 and 2023[269] Risk Management and Future Outlook - The company expects to meet long-term liquidity needs through various capital sources, including future equity issuances and debt offerings[225] - The company aims to reduce dependence on related party tenants to diversify its tenant base while still considering leasing to qualified operators in various markets[276] - The company is exposed to interest rate risk primarily due to long-term debt used for property acquisitions[282] - If one-month SOFR increases by 100 basis points, the company's annual cash flow would decrease by approximately $2.0 million[283] - The company expects to be protected from inflation through provisions in the majority of its long-term leases, which may include rent escalators[281] - The company assesses real estate asset impairment when cash flows generated by the asset are less than its carrying amount[273] - The company utilizes independent appraisals and market data to estimate fair values for real estate acquisitions, impacting depreciation and amortization[271] Dividend Policy - The Company expects to make quarterly dividend payments in cash, with an annual dividend amount no less than 90% of its annual REIT taxable income[260]

Company Overview - Strawberry Fields REIT (STRW) owns and leases 130 facilities across 11 states, specializing in skilled nursing facilities (SNFs), long-term acute care hospitals (LTACHs), and assisted living facilities (ALFs)[23, 25] - The company's history began over 21 years ago with the acquisition of skilled nursing facilities in Indiana[23] - The company has demonstrated strong growth in Adjusted EBITDA (CAGR of 82%) and Adjusted FFO (CAGR of 126%) from 2019 through 2024[29] Financial Performance - The company's 2024 Adjusted FFO was $558 million, or $111 per share, compared to $102 per share in 2023[23] - The company's 2024 Adjusted EBITDA was $906 million, or $180 per share, compared to $153 per share in 2023[23] - The company's annualized dividend yield as of December 2024 was 53%[23] Portfolio and Strategy - The company's portfolio includes 118 owned assets plus one asset under a long-term lease, totaling 14,540 licensed beds[25, 32] - The company has an acquisition pipeline of over $350 million[32] - The company focuses on smaller, off-market deals with a projected 10% ROI and 20% levered IRR over a 10-year investment horizon[56] Debt Structure - Most of the company's debt is fixed/low interest, long-term HUD guaranteed debt with a maturity of 20+ years and a weighted average interest rate of 391%[23] - The company's net debt leverage ratio is 519%[32]

Financial Data and Key Metrics Changes - The company reported a total asset increase of 27.7% to $170 million, driven by significant portfolio expansion [16] - Total liabilities rose by 23.6% to $134.5 million, while equity increased by 76.8% year-over-year, amounting to $36 million [17] - Revenue grew by $17.3 million or 17.3%, resulting in a net income of $26.5 million, which is a 30.9% increase compared to the previous year [19] - Adjusted AFFO reached $55.8 million, and adjusted EBITDA was $90.6 million, reflecting year-over-year growth rates of 12.6% and 8.2% respectively [20] Business Line Data and Key Metrics Changes - The company expanded its portfolio from 109 to 130 facilities, increasing the number of beds from 12,449 to 14,540, a 14% increase [7][13] - Base rents increased from $84 million in 2020 to $104 million in 2024, with expectations to reach around $130 million in 2025 [8][25] - The average lease term improved from 4.6 years to 7.4 years by the end of 2024 [9] Market Data and Key Metrics Changes - The company has grown its tenant base from ten operators to forty, indicating a diversification in its operational partnerships [7] - The company collected 100% of its contractual rents during the year, showcasing strong operational performance [10] Company Strategy and Development Direction - The company aims to continue its growth trajectory by focusing on acquisitions that fit its operational model, emphasizing disciplined investment strategies [22][24] - The management expressed a commitment to maintaining a strong dividend policy, increasing the dividend from $0.12 to $0.14 per share, representing a 16.6% increase [21] - The company is looking to improve its market presence and stock liquidity by engaging with institutional investors and participating in conferences [26][28] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the future, expecting to close approximately $150 million in acquisitions in 2025, with a focus on controlled growth [45] - Concerns regarding reimbursement rates and regulatory environments were acknowledged, but management expressed confidence in the ability to navigate these challenges [84][85] Other Important Information - The company has authorized a cash dividend of $0.14 per share, marking its tenth consecutive quarter of dividend payments [14] - The company has established an ATM program and completed its first underwritten public offering, raising $35 million [11] Q&A Session Summary Question: Can you provide details on the transaction market and deal flow? - Management indicated that they are seeing consistent deal flow but will only pursue opportunities that fit their investment criteria [41][42] Question: What are the leverage expectations for 2025? - Management expects to maintain a debt-to-equity ratio between 45% and 55%, aiming for the lower end of that range [46][47] Question: What is the forecast for 2025 AFFO per share? - Management anticipates an AFFO per share in the range of $1.20, with expectations to potentially exceed that figure [50][51] Question: Can you discuss the status of lease expirations for 2025? - Management confirmed that most leases have renewed, with only two remaining, one of which is expected to renew and the other is being actively marketed for a new tenant [58][60] Question: How significant was the ATM issuance in the fourth quarter? - The ATM issuance in the fourth quarter involved approximately 71,000 shares, raising around $161,000 [70] Question: Are there any concerns about tenants moving out? - Management expressed confidence in their tenant relationships, noting that only one tenant is expected to move out, and they are actively pursuing a new tenant for that asset [88][90]

Core Viewpoint - Strawberry Fields REIT held its year-end 2024 earnings call, highlighting its financial performance and strategic focus on acquisitions and investor relations [2]. Group 1: Company Overview - The call featured key participants including the Chief Investment Officer, Chairman and CEO, and CFO, indicating a strong leadership presence [2]. - The company released its year-end 2024 results, which are accessible on its investor relations website, suggesting transparency and accessibility of information for investors [2]. Group 2: Financial Performance - The earnings call is part of the company's routine to discuss financial performance, including projections regarding future financial metrics and operational strategies [3]. - Non-GAAP financial results will be referenced during the call, indicating a focus on alternative performance measures that may provide additional insights into the company's financial health [4].

Revenue and Income Growth - 2024 rental revenues increased by $17.3 million or 17.3% compared to fiscal year 2023, totaling $104.4 million[4] - Net income rose from $20.2 million in 2023 to $26.5 million in 2024, reflecting increased rental revenue and lower losses on real estate[11] - Rental revenues increased to $117,058,000 in 2024 from $99,805,000 in 2023, representing a growth of 17.2%[22] - Net income rose to $26,505,000 in 2024, compared to $20,244,000 in 2023, an increase of 31.0%[22] - Funds from Operations (FFO) for 2024 were $60,193,000, up from $49,479,000 in 2023, reflecting a growth of 21.5%[25] - Adjusted Funds from Operations (AFFO) increased to $55,825,000 in 2024 from $52,668,000 in 2023, a rise of 5.4%[25] - Basic and diluted income per common share improved to $0.57 in 2024, compared to $0.39 in 2023, an increase of 46.2%[22] - Comprehensive income attributable to common stockholders was $3,906,000 in 2024, compared to $2,639,000 in 2023, an increase of 48.0%[22] Expenses and Liabilities - General and administrative expenses increased by $1.2 million or 20.9% compared to fiscal year 2023[7] - Interest expense increased by $8.1 million or 30.5% compared to fiscal year 2023, primarily due to additional interest payments on bonds[8] - Total expenses increased to $55,755,000 in 2024 from $52,366,000 in 2023, a rise of 6.6%[22] - Interest expense increased to $34,808,000 in 2024, compared to $26,674,000 in 2023, an increase of 30.5%[22] - Total liabilities rose to $704.0 million in 2024 from $569.5 million in 2023[21] Assets and Acquisitions - Total assets increased to $787.6 million in 2024 from $616.8 million in 2023[21] - The company acquired 15 facilities (1,985 beds) for $130.3 million in 2024, expanding into Missouri[3] - The company closed the acquisition of six healthcare facilities in Kansas for $24 million in January 2025[2] Rent Collection and Dividends - The company collected 100% of its contractual rents for the year ended December 31, 2024[2] - The company declared a cash dividend of $0.14 per share, payable on March 31, 2025[12] Stock and Shareholder Information - The weighted average number of common stock outstanding increased to 7,124,158 in 2024 from 6,365,196 in 2023, an increase of 11.9%[22] - The company recognized a loss on real estate investment impairment of $2,451,000 in 2023, which was not present in 2024[22][26]

Core Insights - The article compares Strawberry Fields REIT, Inc. (STRW) and National Health Investors (NHI) to determine which stock is more attractive to value investors [1] Valuation Metrics - STRW has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision activity compared to NHI, which has a Zacks Rank of 3 (Hold) [3] - STRW's forward P/E ratio is 9.15, significantly lower than NHI's forward P/E of 14.96, suggesting STRW may be undervalued [5] - STRW has a PEG ratio of 1.14, while NHI's PEG ratio is 4.42, indicating STRW's expected earnings growth is more favorable [5] - STRW's P/B ratio is 1.44, compared to NHI's P/B of 2.44, further supporting STRW's valuation attractiveness [6] - Based on these metrics, STRW holds a Value grade of A, while NHI has a Value grade of D, highlighting STRW's superior valuation profile [6] Earnings Outlook - STRW is currently experiencing an improving earnings outlook, which enhances its attractiveness in the Zacks Rank model [7]