Strawberry Fields(US:STRW)2025-11-06 21:55Financial Performance - Net income rose to $8.9 million for the third quarter of 2025, a 29% increase from $6.9 million in the same period of 2024, driven by property acquisitions and higher rental income[242]. - Net income increased to $24.5 million, a rise of 23% compared to the previous year, driven by higher rental income[247]. - The Company reported net income of $24.5 million for the nine months ended September 30, 2025, compared to $19.9 million for the same period in 2024, representing a 23.5% increase[285]. - Funds from operations (FFO) for the nine months ended September 30, 2025, were $58.9 million, up from $44.6 million in 2024, indicating a 32.1% increase[285]. Revenue and Rental Income - Rental revenues increased by $10.3 million or 35% to $39.7 million for the three months ended September 30, 2025, primarily due to the acquisition of 27 additional properties and a new master lease in Kentucky[239]. - Total rental revenues increased by $28.3 million or 33% due to the net acquisition of 27 properties and renegotiation of certain master leases[243]. - The Company completed the acquisition of a skilled nursing facility with 112 licensed beds for $11.5 million, adding $1.3 million in initial annual base rents[230]. - On July 1, 2025, the Company acquired nine skilled nursing facilities for $59 million, increasing annual rents by $5.5 million[232]. Expenses and Indebtedness - Interest expense increased by $4.4 million or 51% to $13.0 million, primarily due to new commercial bank loans and bond issuances[241]. - Depreciation and amortization expenses rose by $9.7 million or 39%, driven by the acquisition of new properties and lease rights[244]. - Interest expense, net, increased by $13.0 million or 54%, primarily due to additional interest incurred on a commercial bank loan and bond issuances[246]. - Total indebtedness as of September 30, 2025, was approximately $779.4 million, including $313.9 million in various bond series[253]. - The Company had a total gross note payable and senior debt of $779.4 million as of September 30, 2025, compared to $673.9 million at the end of 2024, reflecting a 15.7% increase[282]. Cash Flow - Cash provided by operating activities was $69.5 million for the nine months ended September 30, 2025, compared to $34.5 million in 2024[257]. - Cash used in investing activities totaled $107.3 million, primarily for the acquisition of 9 properties in Missouri and other locations[258]. Investment Strategy - The Company expects to continue diversifying its investments by tenant, facility type, and geography to enhance long-term stockholder value[227]. - The Company has a disciplined investment strategy focused on healthcare real estate assets to provide opportunities for dividend growth and asset appreciation[227]. - The company expects to meet long-term liquidity requirements through various sources, including future equity issuances and debt offerings[251]. - The company intends to distribute at least 90% of its REIT taxable income to stockholders annually[248]. Compliance and Controls - The Company is in compliance with financial covenants, including a maximum indebtedness to EBITDA ratio of 8.0 to 1 and a minimum GAAP equity of $20.0 million as of September 30, 2025[266][267]. - As of September 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[293]. - There were no changes in internal control over financial reporting during the quarter ended September 30, 2025, that materially affected the internal control[294]. Legal Matters - The company is not currently a party to any material legal proceedings that are not covered by insurance, with previous complaints dismissed for lack of jurisdiction[296][298]. Property Transactions - The Company sold a property in Michigan for $2.7 million, resulting in a loss of $0.01 million[233]. - The Company foreclosed and sold four properties at auction for a total of $4.4 million in July 2022, and took title of a fifth property with an estimated fair value of $1.2 million in December 2022[302]. - The Company expects to close the acquisition of a skilled nursing facility for $3.0 million, with initial annual base rents of $0.3 million and 3% annual rent increases[287]. Debt Instruments - As of September 30, 2025, the Company had outstanding Series A Bonds totaling NIS 302.2 million ($91.4 million) and Series B Bonds totaling NIS 312.0 million ($94.4 million)[271][272]. - The Series D Bonds had an outstanding principal balance of approximately NIS 175.8 million ($53.2 million) as of September 30, 2025[279]. - The Company issued additional Series C Bonds totaling NIS 62.0 million ($16.6 million) in October 2024 at a price of 99.3%[274]. - The Company has $161.8 million (20.8% of total debt) in floating rate debt, which is subject to interest rate risk based on one-month SOFR[290]. - The Company incurred offering and issuance costs of approximately $2.5 million for the Series B Bonds issued in June 2025[272].