Strawberry Fields(STRW) - 2024 Q4 - Annual Report

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]