Strawberry Fields(US:STRW)2025-05-09 10:07PART I Financial Information Item 1. Condensed Financial Statements 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 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 debt10 Condensed Consolidated Statements of Income and Comprehensive Income 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 gains13 Condensed Consolidated Statements of Equity - Total equity increased from $83.6 million at December 31, 2024, to $87.2 million at March 31, 202516 - 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 interests16 Condensed Consolidated Statements of Cash Flows 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 million18223 - Investing activities primarily consisted of $29.0 million for the purchase of real estate investments18224 - 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 sales18225 Notes to Condensed Consolidated Financial Statements - 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 202423 - 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 payable767778 - Total gross debt increased to $715.5 million as of March 31, 2025, from $673.9 million at year-end 202490 - As of March 31, 2025, 67 out of 132 tenants were related parties, contributing $17.4 million in rental income for the quarter177181 - Subsequent to the quarter's end, on April 4, 2025, the Company acquired a skilled nursing facility near Houston, Texas for $11.5 million191 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 - The company's portfolio expanded to 121 healthcare properties with 14,640 licensed beds across 11 states199 - Key acquisitions in Q1 2025 include six facilities in Kansas for $24.0 million and one facility in Oklahoma for $5.0 million204205 - Subsequent to the quarter, the company acquired a facility in Texas for $11.5 million on April 4, 2025206 - As of the report date, none of the company's tenants were delinquent on rent payments207 Results of Operations - Rental revenues increased by 34.1% YoY to $9.5 million, primarily due to new master leases in Kentucky, Missouri, and Kansas209 - Depreciation and amortization expenses rose due to properties purchased in 2024 and Q1 2025, and new intangible assets related to the Kentucky Master Lease210 - Interest expense increased by 63.4% YoY, driven by higher bond balances, a new note payable, and a new commercial bank loan facility212 - Net income attributable to common stockholders more than doubled, increasing 112.3% to $1.6 million from $0.7 million in the prior-year quarter209 Liquidity and Capital Resources - As of March 31, 2025, the company had cash, cash equivalents, and restricted cash of $71.1 million215 - Total indebtedness stood at approximately $715.5 million219 - 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 2026220 Funds From Operations (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 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 debt254 - As of March 31, 2025, $194.4 million, or 27.2% of total debt, is floating rate debt tied to the one-month SOFR255 - A hypothetical 100 basis point increase in the one-month SOFR would decrease the company's annual cash flow by approximately $1.9 million255 - The company is also exposed to foreign currency risk from its Israeli Shekel-denominated bonds traded on the TASE256258 Item 4. Controls and Procedures 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, 2025260 - 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 controls261 PART II Other Information Item 1. Legal Proceedings 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 2019262263264 - The plaintiffs' claims include fraud, breach of contract, and rescission related to alleged failure to perform post-closing obligations266 - The company and named defendants believe the claims are without merit and intend to defend the litigation vigorously, not expecting a material adverse effect266 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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 2025269