Strawberry Fields(STRW) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total assets increased to $661.5 million, up$25.7 million or 4% from the previous quarter [17] - Liabilities rose to $606.3 million, an increase of$21.1 million or 3.6% from the prior quarter [18] - Equity reached $55.2 million, which is$4.6 million or 9.4% higher than the previous quarter [19] - Year-to-date net income for September 2024 was $19.9 million, a$5.5 million or 37.8% increase compared to the same period in 2023 [23] Business Line Data and Key Metrics Changes - The company collected 100% of contractual rents during the quarter [9] - Acquired two skilled nursing facilities in Texas for $15.25 million, expected to increase annual base rents by$1.525 million [11] - Acquired a property in Tennessee for $6.7 million, expected to increase annual rents by$670,000 [12] - Subsequent acquisition of an 86-bed facility in Indiana for $6 million, expected to increase annual rents by$600,000 [13] Market Data and Key Metrics Changes - The company operates 114 facilities across nine states with over 12,800 beds as of September 30, 2024 [8] - Occupancy rates were reported at 70.4%, with expectations for improvement in 2025 [40] Company Strategy and Development Direction - The company aims to grow its asset base, with expectations to close on an additional $110 million of assets in Q4 [25] - Focus on acquiring properties under master leases with third-party operators [29] - The company plans to maintain a consistent dividend policy, with a recent increase to$0.14 per share [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about occupancy rates improving due to demographic trends and regulatory changes [42][43] - The company anticipates continued growth in net income and funds from operations (FFO), projecting $125 million in revenue for the next year [28] - Management highlighted the stability of the nursing home business, emphasizing consistent rent collection [49] Other Important Information - The company has established an ATM program to enhance liquidity and financing flexibility [10] - The board authorized a cash dividend increase, marking the fourth increase in nine consecutive quarters of dividend payments [14] Q&A Session Summary Question: Is there a difference in cap rates between regions? - Management indicated that they do not see a significant difference in cap rates across regions, focusing on consistent financial metrics regardless of location [36][38] Question: What are the expectations for occupancy rates in 2025? - Management believes occupancy rates could improve, particularly in urban areas, while rural facilities may take longer to recover [41][42] Question: Will the dividend grow in line with FFO? - Management confirmed that as FFO increases, the dividend is likely to grow correspondingly, maintaining a conservative payout ratio [45]