Strawberry Fields(STRW) - 2024 Q3 - Quarterly Report

Financial Performance - Rental revenues for the nine months ended September 30, 2024, reached $86,570,000, a 16.5% increase compared to$ 74,325,000 for the same period in 2023[7] - Net income attributable to common stockholders for the nine months ended September 30, 2024, was $2,628,000, compared to$ 1,782,000 for the same period in 2023, reflecting a 47.5% increase[7] - The company reported a comprehensive income attributable to common stockholders of $2,628,000 for the nine months ended September 30, 2024, compared to$ 1,782,000 for the same period in 2023[7] - For the nine months ended September 30, 2024, net cash provided by operating activities was $34,525,000, compared to$ 42,006,000 for the same period in 2023[10] - The company reported net bonds, notes payable, and other debt of $579,629,000 as of September 30, 2024, up from$ 536,486,000 as of December 31, 2023, reflecting an increase of approximately 8%[77] - The company’s gross bonds, notes payable, and other debt totaled $584,508,000 as of September 30, 2024, compared to$ 539,145,000 as of December 31, 2023, indicating a rise of about 8.4%[77] - Total expenses for Q3 2024 were $13.4 million, up 5.7% from$ 12.7 million in Q3 2023, with notable increases in depreciation (9.2%) and amortization (59.4%)[187] - General and administrative expenses increased by $1.1 million or 27.4% in the nine months ended September 30, 2024, primarily due to higher insurance and corporate salaries[192] Assets and Liabilities - Total assets increased to$ 661,545,000 as of September 30, 2024, up from $616,795,000 on December 31, 2023, representing a growth of 7.5%[6] - Total liabilities rose to$ 606,326,000 as of September 30, 2024, compared to $569,522,000 at the end of 2023, indicating a 6.5% increase[6] - Goodwill and other intangible assets increased to$ 23,286,000 as of September 30, 2024, from $8,604,000 at the end of 2023, a significant increase of 171.5%[6] - The company’s total stockholders' equity increased to$ 55,219,000 as of September 30, 2024, up from $47,273,000 at the end of 2023, reflecting a growth of 16.5%[6] - The company had cash and cash equivalents of$ 53.2 million as of September 30, 2024, with the ability to offer an additional $350 million in bonds subject to market conditions[196] Cash Flow and Investments - Cash used in investing activities totaled$ 43,010,000 for the nine months ended September 30, 2024, compared to $113,550,000 in the same period of the previous year[10] - The net increase in cash and cash equivalents for the nine months ended September 30, 2024, was$ 15.5 million, contrasting with a decrease of $10.7 million in 2023[203] - Cash and cash equivalents at the end of the period for 2024 were$ 53.2 million, up from $35.0 million in 2023, marking an increase of approximately 52.1%[203] - The company expects to meet its long-term liquidity needs through various sources, including future equity issuances and net cash provided by operations[198] Debt and Financing - The company closed a mortgage loan facility in August 2023, borrowing approximately$ 66 million, with an interest rate of 8.42% as of September 30, 2024[81] - The Series A Bonds had an outstanding balance of $49.7 million as of September 30, 2024, with an interest rate of 6.97% per annum[86][87] - The Series C Bonds had an outstanding balance of$ 55.4 million as of September 30, 2024, with an initial interest rate of 5.7% per annum[97][98] - The company has committed to not pledge its assets under general liens without prior consent from bondholders[92] - The company’s financial covenants require that consolidated equity not be less than $20 million and that the ratio of indebtedness to EBITDA not exceed 10[88][101] Property and Operations - The Company owns approximately 14.2% of the outstanding OP units as of September 30, 2024, up from 12.6% as of December 31, 2023[12] - The Company's portfolio consists of 104 healthcare properties with an aggregate of 12,889 licensed beds, generating revenue primarily through long-term triple-net leases[14] - The Company owned 103 properties and leased 1 property as of September 30, 2024, with 25.7% of its total skilled nursing beds located in Indiana and 32.8% in Illinois[40] - The cumulative number of licensed beds increased from 12,201 as of December 31, 2023, to 12,889 as of September 30, 2024, representing an increase of about 5.6%[70] - The Company plans to acquire eight healthcare facilities in Missouri for$ 87.5 million, with the closing anticipated before year-end 2024[159] Rental Income and Revenue - The Company received rental income from related parties amounting to $53.2 million for the nine months ended September 30, 2024, compared to$ 40.6 million for the same period in 2023, representing a 31.8% increase[150] - Total future minimum rental revenues for the company's tenants are projected to be $733,212,000, with$ 25,068,000 expected in the three-month period of 2024[72] - Rental revenues increased by $3.7 million or 14.3% from$ 25.8 million in Q3 2023 to $29.5 million in Q3 2024, driven by higher income from additional properties and lease renewals[187] Depreciation and Amortization - The company reported a depreciation and amortization expense of$ 24,666,000 for September 2024, up from $21,266,000 in September 2023[10] - The increase in depreciation and amortization for the nine months ended September 30, 2024, was$ 3.4 million or 16.0%, primarily due to new property purchases[190] - Depreciation and amortization expenses for the nine months ended September 30, 2024, were $24.7 million, compared to$ 21.3 million in 2023, indicating an increase of about 16.0%[204] Compliance and Risk - The company was in compliance with all financial covenants as of September 30, 2024, including a debt service coverage ratio (DSCR) requirement of at least 1.05[82] - The company is subject to market concentration risk, with significant revenue generated from Medicare and Medicaid, making it vulnerable to regulatory changes[40] - The Company has potential exposure to claims for fraud and breach of contract related to post-closing obligations, but believes these claims are without merit[136]