UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Explanatory Note
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K filed by Strawberry Fields REIT, Inc. (the “Company”) includes information that may constitute forward-looking statements. These forward-looking statements are based on the Company’s current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to the Company. By their nature, forward-looking statements address matters that are subject to risks and uncertainties. Forward-looking statements include, without limitation, statements relating to projected industry growth rates, the Company’s current growth rates and the Company’s present and future cash flow position. A variety of factors could cause actual events and results, as well as the Company’s expectations, to differ materially from those expressed in or contemplated by the forward-looking statements. Risk factors affecting the Company are discussed in detail in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by applicable securities laws.
Item 2.02 Results of Operations and Financial Condition .
On March 9, 2023, the Company issued a press release regarding its financial results for the fiscal ended December 31, 2022. The Company’s press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
In accordance with General Instruction B.2 of Form 8-K, the information set forth herein and in the press release is deemed to be “furnished” and shall not be deemed to be “filed” for purposes of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The information set forth in this Item 2.02 of this Current Report on Form 8-K shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 8.01 Other Events.
On March 6, 2023, our Board of Directors declared a cash dividend of $0.11 per share. The dividend will be paid on March 31, 2023 to common shareholders of record as of the close of business on March 20, 2023.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description of Exhibit | |
| 99.1 | Press Release dated March 9, 2023 | |
| 99.2 | Press Release dated March 9, 2023 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| Strawberry Fields REIT, Inc. | ||
| Dated: March 10, 2023 | By: | /s/ Moishe Gubin |
| Moishe Gubin | ||
| Chief Executive Officer and Chairman | ||
| 3 |
Exhibit 99.1
STRAWBERRY FIELDS REIT ANNOUNCES 2022 YEAR-END OPERATING RESULTS
South Bend, IN. March 9, 2023 (ACCESSWIRE) –Strawberry Fields REIT, Inc. (NYSE AMERICAN:STRW) (the “Company”) reported today its operating results for the year ended December 31, 2022.
Financial Highlights
● For the year ended December 31, 2022, and December 31, 2021:
| ● | FFO was $45.0 million and $32.1 million, respectively. | |
| ● | AFFO was $51.1 million and $43.9 million, respectively. | |
| ● | Net income was $16.4 million and $8.4 million, respectively. | |
| ● | Rental income received was $82.2 million and $77.7 million, respectively. |
Moishe Gubin, Chairman & CEO noted: “We are excited to close another year with strong earnings. We look forward to continuing to grow the Company in 2023 and executing our growth strategy in a controlled manner, as we have over the last two decades. We are also thankful to the New York Stock Exchange for welcoming us to their trading platform and look forward to seeing the benefits of being listed at this storied financial institution.”
Recent Acquisitions
On January 3, 2023, the Company acquired a property located in Kentucky for a total cost of $6.0 million including finder fees and leasehold improvements. This property contains a skilled nursing facility with aggregate of 120 licensed beds. The lease has an initial term of 10 years, with two extension options of five years each. The initial annualized base rent is $600,000, which is subject to an annual increase of approximately 3%.
NYSE American Listing
On February 22, 2023, the Company’s common stock commenced trading on the NYSE American exchange. The Company’s stock symbol remains the same (“STRW”).
Dividend
On March 6, 2023, our Board of Directors declared a cash dividend of $0.11 per share. The dividend will be paid on March 31, 2023 to common shareholders of record as of the close of business on March 10, 2023.
Annual Meeting
The Company’s 2023 Annual Meeting of Stockholders will be held on Tuesday, May 16, 2023, at 10:00 a.m. local time. Stockholders of record as of the close of business on Monday, April 6, 2023 will be entitled to receive notice of and to participate at the 2023 Annual Meeting of Stockholders. The meeting will be held at the corporate offices of Infinity Healthcare Management located at 2477 E. Commercial Dr. Ft. Lauderdale FL 23308.
2022 Annual Results
Rental revenues: Rental revenues during 2022 increased by $5.5 million or 6.3% compared to fiscal year 2021 due to the six new properties acquired in August of 2021. This increase was offset by a one-time loss of $1.1 million in the second quarter of 2022 due to the write-offs of straight-line rent receivables related to certain defaulted leases. Additionally, revenue was increased by $1.9 million due to additional property taxes being reimbursed by the tenants.
Depreciation and Amortization: Increase in depreciation of $1.07 million or 4.4% from fiscal year 2021 to fiscal year 2022 is primarily due to $64.1 million of new real estate investments in the third quarter of 2021.
General and Administrative Expense: Decrease in general and administrative expenses of $0.3 million or 4.5% during fiscal year 2022 compared to fiscal year 2021 is primarily due to no stock-based compensation expense in 2022. In 2021, $250,000 of stock-based compensation was recognized.
Property and other Taxes: The increase in property taxes of $2.5 million or 23.6% during fiscal year 2022 compared to fiscal year 2021 is primarily due to increases in real estate taxes on gross leased properties and Tennessee franchise taxes paid in 2022.
(Credit) Provision for Doubtful Accounts: During 2022, the Company recognized $5.6 million in income from the successful foreclosure of mortgages held by the Company on properties located in Massachusetts with respect to loans written off on December 31, 2021. The decrease in the provision for doubtful accounts of $10.8 million is primarily related to this recovery.
Interest expense, net: The decrease in interest expense of $0.8 million or 3.6% from Fiscal year 2021 to fiscal year 2022 is primarily related to lower amount of bond principal and decline in total debt.
Gain from Sale of Real Estate Investments: There were no gains from the sale of real estate during 2022 because there were no asset dispositions during this year.
Foreign Currency Transaction Loss: Our bond indebtedness is denominated in NIS. As a result, we are subject to potential foreign currency transaction loss due to changes in the value of the U.S. dollar relative to the New Israel Shekel. In 2022, we recorded a foreign currency transaction loss of $10.9 million in connection with the repayment of the Series B Bonds in 2022
Net Income: The increase in net income from $8.4 million during the year ended December 31, 2021 to $16.4 million in the year ended December 31, 2022 is mainly due to increases in rental revenue (net of increase in Real Estate Taxes) and recoveries of provisions made during fiscal year 2021 offset by the increase in foreign currency transaction losses of $2.2 million, and the absence of the $3.8 million in gain from sale of real estate investments recorded in 2021.
Safe Harbor Statement
Certain statements in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding: future financing plans, business strategies, growth prospects and operating and financial performance; expectations regarding the making of distributions and the payment of dividends; and compliance with and changes in governmental regulations.
Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to: (i) the COVID-19 pandemic and the measures taken to prevent its spread and the related impact on our business or the businesses of our tenants; (ii) the ability and willingness of our tenants to meet and/or perform their obligations under the triple-net leases we have entered into with them, including, without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (iii) the ability of our tenants to comply with applicable laws, rules and regulations in the operation of the properties we lease to them; (iv) the ability and willingness of our tenants to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant; (v) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities, and the ability to acquire and lease the respective properties to such tenants on favorable terms; (vi) the ability to generate sufficient cash flows to service our outstanding indebtedness; (vii) access to debt and equity capital markets; (viii) fluctuating interest rates; (ix) the ability to retain our key management personnel; (x) the ability to maintain our status as a real estate investment trust (“REIT”); (xi) changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs; (xii) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xiii) any additional factors included under “Risk Factors” in our Registration Statement on Form 10 dated July 12, 2022, including in the section entitled “Risk Factors” in Item 1A of Part I of such report, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC.
Forward-looking statements speak only as of the date of this press release. Except in the normal course of our public disclosure obligations, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any statement is based.
Non-GAAP Financial Measures
Reconciliations, definitions and important discussions regarding the usefulness and limitations of the Non-GAAP Financial Measures used in this release can be found below.
About Strawberry Fields REIT
Strawberry Fields REIT, Inc., is a self-administered real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing and certain other healthcare-related properties. The Company’s portfolio includes 80 healthcare properties, of which 79 are owned, located throughout the states of Arkansas, Illinois, Indiana, Kentucky, Michigan, Ohio, Oklahoma, Tennessee and Texas. The properties comprise 86 healthcare facilities, consisting of 79 stand-alone skilled nursing facilities, two dual-purpose facilities used as both skilled nursing facilities and long-term acute care hospitals, and three assisted living facilities.
Investor Relations:
Strawberry Fields REIT, Inc.
IR@sfreit.com
+1 (773) 747-4100 x422
STRAWBERRY FIELDS REIT, Inc. and Subsidiaries and Predecessor
CONSOLIDATED BALANCE SHEETS
(Amounts in $000’s, except share data)
Unaudited
| December 31, | ||||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Real estate investments, net | $ | 438,911 | $ | 462,728 | ||||
| Cash and cash equivalents | 20,197 | 26,206 | ||||||
| Restricted cash and equivalents | 25,507 | 25,922 | ||||||
| Straight-line rent receivable, net | 23,534 | 23,262 | ||||||
| Right of use lease asset | 1,833 | 2,064 | ||||||
| Goodwill, other intangible assets and lease rights | 11,632 | 14,660 | ||||||
| Deferred financing expenses | 5,791 | 4,826 | ||||||
| Notes receivable, net | 19,419 | 9,831 | ||||||
| Other assets | 176 | 465 | ||||||
| Total Assets | $ | 547,000 | $ | 569,964 | ||||
| Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 13,723 | $ | 20,654 | ||||
| Bonds, net | 74,412 | 192,549 | ||||||
| Notes payable and other debt | 381,003 | 309,251 | ||||||
| Operating lease liability | 1,833 | 2,064 | ||||||
| Other liabilities | 10,892 | 10,396 | ||||||
| Non-controlling interest redemption liability | 15,753 | - | ||||||
| Total Liabilities | $ | 497,616 | $ | 534,914 | ||||
| Commitments and Contingencies | ||||||||
| Equity | ||||||||
| Common stock, $.0001 par value, 500,000,000 shares authorized, 6,365,856 and 5,849,746 shares issued and outstanding in 2022 and 2021 | - | - | ||||||
| Preferred stock, $.0001 par value, 100,000,000 shares authorized, 0 shares issued and outstanding | - | - | ||||||
| Additional paid in capital | $ | 5,792 | $ | 4,327 | ||||
| Accumulated other comprehensive income (loss) | 386 | (2,455 | ) | |||||
| Retained earnings | 1,608 | 393 | ||||||
| Total Stockholders’ Equity | $ | 7,786 | $ | 2,265 | ||||
| Non-controlling interest | $ | 41,598 | $ | 32,785 | ||||
| Total Equity | $ | 49,384 | $ | 35,050 | ||||
| Total Liabilities and Equity | $ | 547,000 | $ | 569,964 | ||||
STRAWBERRY FIELDS REIT, Inc. and Subsidiaries and Predecessor
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(Amounts in $000’s, except share data)
Unaudited
| Year Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenues | ||||||||
| Rental revenues | $ | 92,543 | $ | 87,032 | ||||
| Expenses: | ||||||||
| Depreciation | $ | 25,530 | 24,460 | |||||
| Amortization | 3,028 | 3,028 | ||||||
| General and administrative expenses | 6,012 | 6,297 | ||||||
| Property taxes | 13,131 | 10,623 | ||||||
| Facility rent expenses | 532 | 735 | ||||||
| (Credit) provision for doubtful accounts | (5,636 | ) | 5,128 | |||||
| Total expenses | $ | 42,597 | $ | 50,271 | ||||
| Income from operations | 49,946 | 36,761 | ||||||
| Interest expense, net | $ | (20,507 | ) | $ | (21,261 | ) | ||
| Amortization of deferred financing costs | (504 | ) | (379 | ) | ||||
| Mortgage insurance premium | (1,704 | ) | (1,769 | ) | ||||
| Total interest expense | $ | (22,715 | ) | $ | (23,409 | ) | ||
| Other income (loss): | ||||||||
| Gain from sale of real estate investments | - | 3,842 | ||||||
| Foreign currency transaction loss | (10,932 | ) | (8,775 | ) | ||||
| Other income | 120 | - | ||||||
| Total other loss | (10,812 | ) | (4,933 | ) | ||||
| Net income | $ | 16,419 | $ | 8,419 | ||||
| Less: | ||||||||
| Net income attributable to non-controlling interest | (14,567 | ) | (3,083 | ) | ||||
| Net income attributable to predecessor | - | (4,943 | ) | |||||
| Net income attributable to common stockholders | 1,852 | 393 | ||||||
| Other comprehensive income (loss): | ||||||||
| Gain (loss) due to foreign currency translation | 14,256 | (6,751 | ) | |||||
| Reclassification of foreign currency transaction losses | 10,932 | 8,775 | ||||||
| Comprehensive income attributable to predecessor | - | (9,681 | ) | |||||
| Comprehensive (income) loss attributable to non-controlling interest | (22,347 | ) | 6,795 | |||||
| Comprehensive income (loss) | $ | 4,693 | $ | (469 | ) | |||
| Net income attributable to common stockholders | $ | 1,852 | $ | 393 | ||||
| Basic and diluted income per common share | $ | .31 | $ | .07 | ||||
| Weighted average number of common shares outstanding | 6,008,953 | 5,846,195 | ||||||
Funds From Operations (“FFO”)
The Company believes that net income as defined by GAAP is the most appropriate earnings measure. We also believe that funds from operations (“FFO”), as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“NAREIT”), and adjusted funds from operations (“AFFO”) are important non-GAAP supplemental measures of our operating performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization. AFFO is defined as FFO excluding the impact of straight-line rent, above-/below-market leases, non-cash compensation and certain non-recurring items. For the years ended December 31, 2022, and 2021, we excluded as non-recurring items the amount of $10.9 million, $8.8 million, respectively, in reclassification of foreign currency transaction losses the Company recorded with respect to foreign currency fluctuations that the Company realized at the time of bond principal payment. We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and makes comparisons of operating results among REITs more meaningful. We consider FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare our operating performance between periods or as compared to other companies.
While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating our liquidity or operating performance. FFO and AFFO also do not consider the costs associated with capital expenditures related to our real estate assets nor do they purport to be indicative of cash available to fund our future cash requirements. Further, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define AFFO differently than we do.
The following table reconciles our calculations of FFO and AFFO for the years ended December 31, 2022 and 2021, to net income, the most directly comparable GAAP financial measure, for the same periods (in thousands):
FFO and AFFO
Year Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (dollars in $1,000s) | (Predecessor) | |||||||
| Net income | $ | 16,419 | $ | 8,419 | ||||
| Depreciation and amortization | 28,558 | 27,488 | ||||||
| Gain from Sale of Real Estate Investments | - | (3,842 | ) | |||||
| Funds from Operations | 44,977 | 32,065 | ||||||
| Adjustments to FFO: | ||||||||
| (Credit) Provision for doubtful accounts* | (5,636 | ) | 5,128 | |||||
| Straight-line rent | (272 | ) | (2,032 | ) | ||||
| Straight-line rent receivable write-off** | 1,075 | - | ||||||
| Foreign currency transaction loss | 10,932 | 8,775 | ||||||
| Funds from Operations, as Adjusted | $ | 51,076 | $ | 43,936 | ||||
* During the year ended December 31, 2022, the Company recovered $4.4 million in cash with respect to foreclosure sales of assets in Massachusetts. In addition, the Company recognized $1.2 million with respect to a foreclosed property in Massachusetts.
** The Company recognized a loss of $1,075,000 in the second quarter of 2022 due to the write-off of straight-line rent receivables related to the Western Illinois facilities
Strawberry Fields is a REIT that invests in the long-term healthcare industry, primarily in skilled nursing facilities. Its portfolio of assets is operated by a diverse group of healthcare companies, predominantly in a triple-net lease structure.
Exhibit 99.2
CORRECTION: STRAWBERRY FIELDS REIT ANNOUNCES 2022 YEAR-END OPERATING RESULTS
Correction by Source: Strawberry Fields REIT Announces 2022 Year-End Operating Results
The dividend will be paid on March 31, 2023 to common shareholders of record as of the close of business on March 20, 2023 (instead of March 10, 2023).
South Bend, IN. March 9, 2023 (ACCESSWIRE) –Strawberry Fields REIT, Inc. (NYSE AMERICAN:STRW) (the “Company”) reported today its operating results for the year ended December 31, 2022.
Financial Highlights
● For the year ended December 31, 2022, and December 31, 2021:
| ● | FFO was $45.0 million and $32.1 million, respectively. | |
| ● | AFFO was $51.1 million and $43.9 million, respectively. | |
| ● | Net income was $16.4 million and $8.4 million, respectively. | |
| ● | Rental income received was $82.2 million and $77.7 million, respectively. |
Moishe Gubin, Chairman & CEO noted: “We are excited to close another year with strong earnings. We look forward to continuing to grow the Company in 2023 and executing our growth strategy in a controlled manner, as we have over the last two decades. We are also thankful to the New York Stock Exchange for welcoming us to their trading platform and look forward to seeing the benefits of being listed at this storied financial institution.”
Recent Acquisitions
On January 3, 2023, the Company acquired a property located in Kentucky for a total cost of $6.0 million including finder fees and leasehold improvements. This property contains a skilled nursing facility with aggregate of 120 licensed beds. The lease has an initial term of 10 years, with two extension options of five years each. The initial annualized base rent is $600,000, which is subject to an annual increase of approximately 3%.
NYSE American Listing
On February 22, 2023, the Company’s common stock commenced trading on the NYSE American exchange. The Company’s stock symbol remains the same (“STRW”).
Dividend
On March 6, 2023, our Board of Directors declared a cash dividend of $0.11 per share. The dividend will be paid on March 31, 2023 to common shareholders of record as of the close of business on March 20, 2023.
Annual Meeting
The Company’s 2023 Annual Meeting of Stockholders will be held on Tuesday, May 16, 2023, at 10:00 a.m. local time. Stockholders of record as of the close of business on April 6, 2023 will be entitled to receive notice of and to participate at the 2023 Annual Meeting of Stockholders. The meeting will be held at the corporate offices of Infinity Healthcare Management located at 2477 E. Commercial Dr. Ft. Lauderdale FL 23308.
2022 Annual Results
Rental revenues: Rental revenues during 2022 increased by $5.5 million or 6.3% compared to fiscal year 2021 due to the six new properties acquired in August of 2021. This increase was offset by a one-time loss of $1.1 million in the second quarter of 2022 due to the write-offs of straight-line rent receivables related to certain defaulted leases. Additionally, revenue was increased by $1.9 million due to additional property taxes being reimbursed by the tenants.
Depreciation and Amortization: Increase in depreciation of $1.07 million or 4.4% from fiscal year 2021 to fiscal year 2022 is primarily due to $64.1 million of new real estate investments in the third quarter of 2021.
General and Administrative Expense: Decrease in general and administrative expenses of $0.3 million or 4.5% during fiscal year 2022 compared to fiscal year 2021 is primarily due to no stock-based compensation expense in 2022. In 2021, $250,000 of stock-based compensation was recognized.
Property and other Taxes: The increase in property taxes of $2.5 million or 23.6% during fiscal year 2022 compared to fiscal year 2021 is primarily due to increases in real estate taxes on gross leased properties and Tennessee franchise taxes paid in 2022.
(Credit) Provision for Doubtful Accounts: During 2022, the Company recognized $5.6 million in income from the successful foreclosure of mortgages held by the Company on properties located in Massachusetts with respect to loans written off on December 31, 2021. The decrease in the provision for doubtful accounts of $10.8 million is primarily related to this recovery.
Interest expense, net: The decrease in interest expense of $0.8 million or 3.6% from Fiscal year 2021 to fiscal year 2022 is primarily related to lower amount of bond principal and decline in total debt.
Gain from Sale of Real Estate Investments: There were no gains from the sale of real estate during 2022 because there were no asset dispositions during this year.
Foreign Currency Transaction Loss: Our bond indebtedness is denominated in NIS. As a result, we are subject to potential foreign currency transaction loss due to changes in the value of the U.S. dollar relative to the New Israel Shekel. In 2022, we recorded a foreign currency transaction loss of $10.9 million in connection with the repayment of the Series B Bonds in 2022
Net Income: The increase in net income from $8.4 million during the year ended December 31, 2021 to $16.4 million in the year ended December 31, 2022 is mainly due to increases in rental revenue (net of increase in Real Estate Taxes) and recoveries of provisions made during fiscal year 2021 offset by the increase in foreign currency transaction losses of $2.2 million, and the absence of the $3.8 million in gain from sale of real estate investments recorded in 2021.
Safe Harbor Statement
Certain statements in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, statements regarding: future financing plans, business strategies, growth prospects and operating and financial performance; expectations regarding the making of distributions and the payment of dividends; and compliance with and changes in governmental regulations.
Words such as “anticipate(s),” “expect(s),” “intend(s),” “plan(s),” “believe(s),” “may,” “will,” “would,” “could,” “should,” “seek(s)” and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to: (i) the COVID-19 pandemic and the measures taken to prevent its spread and the related impact on our business or the businesses of our tenants; (ii) the ability and willingness of our tenants to meet and/or perform their obligations under the triple-net leases we have entered into with them, including, without limitation, their respective obligations to indemnify, defend and hold us harmless from and against various claims, litigation and liabilities; (iii) the ability of our tenants to comply with applicable laws, rules and regulations in the operation of the properties we lease to them; (iv) the ability and willingness of our tenants to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant, as well as any obligations, including indemnification obligations, we may incur in connection with the replacement of an existing tenant; (v) the availability of and the ability to identify (a) tenants who meet our credit and operating standards, and (b) suitable acquisition opportunities, and the ability to acquire and lease the respective properties to such tenants on favorable terms; (vi) the ability to generate sufficient cash flows to service our outstanding indebtedness; (vii) access to debt and equity capital markets; (viii) fluctuating interest rates; (ix) the ability to retain our key management personnel; (x) the ability to maintain our status as a real estate investment trust (“REIT”); (xi) changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs; (xii) other risks inherent in the real estate business, including potential liability relating to environmental matters and illiquidity of real estate investments; and (xiii) any additional factors included under “Risk Factors” in our Registration Statement on Form 10 dated July 12, 2022, including in the section entitled “Risk Factors” in Item 1A of Part I of such report, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC.
Forward-looking statements speak only as of the date of this press release. Except in the normal course of our public disclosure obligations, we expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations or any change in events, conditions or circumstances on which any statement is based.
Non-GAAP Financial Measures
Reconciliations, definitions and important discussions regarding the usefulness and limitations of the Non-GAAP Financial Measures used in this release can be found below.
About Strawberry Fields REIT
Strawberry Fields REIT, Inc., is a self-administered real estate investment trust engaged in the ownership, acquisition, development and leasing of skilled nursing and certain other healthcare-related properties. The Company’s portfolio includes 80 healthcare properties, of which 79 are owned, located throughout the states of Arkansas, Illinois, Indiana, Kentucky, Michigan, Ohio, Oklahoma, Tennessee and Texas. The properties comprise 86 healthcare facilities, consisting of 79 stand-alone skilled nursing facilities, two dual-purpose facilities used as both skilled nursing facilities and long-term acute care hospitals, and three assisted living facilities.
Investor Relations:
Strawberry Fields REIT, Inc.
IR@sfreit.com
+1 (773) 747-4100 x422
STRAWBERRY FIELDS REIT, Inc. and Subsidiaries and Predecessor
CONSOLIDATED BALANCE SHEETS
(Amounts in $000’s, except share data)
Unaudited
| December 31, | ||||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Real estate investments, net | $ | 438,911 | $ | 462,728 | ||||
| Cash and cash equivalents | 20,197 | 26,206 | ||||||
| Restricted cash and equivalents | 25,507 | 25,922 | ||||||
| Straight-line rent receivable, net | 23,534 | 23,262 | ||||||
| Right of use lease asset | 1,833 | 2,064 | ||||||
| Goodwill, other intangible assets and lease rights | 11,632 | 14,660 | ||||||
| Deferred financing expenses | 5,791 | 4,826 | ||||||
| Notes receivable, net | 19,419 | 9,831 | ||||||
| Other assets | 176 | 465 | ||||||
| Total Assets | $ | 547,000 | $ | 569,964 | ||||
| Liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 13,723 | $ | 20,654 | ||||
| Bonds, net | 74,412 | 192,549 | ||||||
| Notes payable and other debt | 381,003 | 309,251 | ||||||
| Operating lease liability | 1,833 | 2,064 | ||||||
| Other liabilities | 10,892 | 10,396 | ||||||
| Non-controlling interest redemption liability | 15,753 | - | ||||||
| Total Liabilities | $ | 497,616 | $ | 534,914 | ||||
| Commitments and Contingencies | ||||||||
| Equity | ||||||||
| Common stock, $.0001 par value, 500,000,000 shares authorized, 6,365,856 and 5,849,746 shares issued and outstanding in 2022 and 2021 | - | - | ||||||
| Preferred stock, $.0001 par value, 100,000,000 shares authorized, 0 shares issued and outstanding | - | - | ||||||
| Additional paid in capital | $ | 5,792 | $ | 4,327 | ||||
| Accumulated other comprehensive income (loss) | 386 | (2,455 | ) | |||||
| Retained earnings | 1,608 | 393 | ||||||
| Total Stockholders’ Equity | $ | 7,786 | $ | 2,265 | ||||
| Non-controlling interest | $ | 41,598 | $ | 32,785 | ||||
| Total Equity | $ | 49,384 | $ | 35,050 | ||||
| Total Liabilities and Equity | $ | 547,000 | $ | 569,964 | ||||
STRAWBERRY FIELDS REIT, Inc. and Subsidiaries and Predecessor
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(Amounts in $000’s, except share data)
Unaudited
| Year Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenues | ||||||||
| Rental revenues | $ | 92,543 | $ | 87,032 | ||||
| Expenses: | ||||||||
| Depreciation | $ | 25,530 | 24,460 | |||||
| Amortization | 3,028 | 3,028 | ||||||
| General and administrative expenses | 6,012 | 6,297 | ||||||
| Property taxes | 13,131 | 10,623 | ||||||
| Facility rent expenses | 532 | 735 | ||||||
| (Credit) provision for doubtful accounts | (5,636 | ) | 5,128 | |||||
| Total expenses | $ | 42,597 | $ | 50,271 | ||||
| Income from operations | 49,946 | 36,761 | ||||||
| Interest expense, net | $ | (20,507 | ) | $ | (21,261 | ) | ||
| Amortization of deferred financing costs | (504 | ) | (379 | ) | ||||
| Mortgage insurance premium | (1,704 | ) | (1,769 | ) | ||||
| Total interest expense | $ | (22,715 | ) | $ | (23,409 | ) | ||
| Other income (loss): | ||||||||
| Gain from sale of real estate investments | - | 3,842 | ||||||
| Foreign currency transaction loss | (10,932 | ) | (8,775 | ) | ||||
| Other income | 120 | - | ||||||
| Total other loss | (10,812 | ) | (4,933 | ) | ||||
| Net income | $ | 16,419 | $ | 8,419 | ||||
| Less: | ||||||||
| Net income attributable to non-controlling interest | (14,567 | ) | (3,083 | ) | ||||
| Net income attributable to predecessor | - | (4,943 | ) | |||||
| Net income attributable to common stockholders | 1,852 | 393 | ||||||
| Other comprehensive income (loss): | ||||||||
| Gain (loss) due to foreign currency translation | 14,256 | (6,751 | ) | |||||
| Reclassification of foreign currency transaction losses | 10,932 | 8,775 | ||||||
| Comprehensive income attributable to predecessor | - | (9,681 | ) | |||||
| Comprehensive (income) loss attributable to non-controlling interest | (22,347 | ) | 6,795 | |||||
| Comprehensive income (loss) | $ | 4,693 | $ | (469 | ) | |||
| Net income attributable to common stockholders | $ | 1,852 | $ | 393 | ||||
| Basic and diluted income per common share | $ | .31 | $ | .07 | ||||
| Weighted average number of common shares outstanding | 6,008,953 | 5,846,195 | ||||||
Funds From Operations (“FFO”)
The Company believes that net income as defined by GAAP is the most appropriate earnings measure. We also believe that funds from operations (“FFO”), as defined in accordance with the definition used by the National Association of Real Estate Investment Trusts (“NAREIT”), and adjusted funds from operations (“AFFO”) are important non-GAAP supplemental measures of our operating performance. Because the historical cost accounting convention used for real estate assets requires straight-line depreciation (except on land), such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined as net income, computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization. AFFO is defined as FFO excluding the impact of straight-line rent, above-/below-market leases, non-cash compensation and certain non-recurring items. For the years ended December 31, 2022, and 2021, we excluded as non-recurring items the amount of $10.9 million, $8.8 million, respectively, in reclassification of foreign currency transaction losses the Company recorded with respect to foreign currency fluctuations that the Company realized at the time of bond principal payment. We believe that the use of FFO, combined with the required GAAP presentations, improves the understanding of our operating results among investors and makes comparisons of operating results among REITs more meaningful. We consider FFO and AFFO to be useful measures for reviewing comparative operating and financial performance because, by excluding the applicable items listed above, FFO and AFFO can help investors compare our operating performance between periods or as compared to other companies.
While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating our liquidity or operating performance. FFO and AFFO also do not consider the costs associated with capital expenditures related to our real estate assets nor do they purport to be indicative of cash available to fund our future cash requirements. Further, our computation of FFO and AFFO may not be comparable to FFO and AFFO reported by other REITs that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define AFFO differently than we do.
The following table reconciles our calculations of FFO and AFFO for the years ended December 31, 2022 and 2021, to net income, the most directly comparable GAAP financial measure, for the same periods (in thousands):
FFO and AFFO
Year Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| (dollars in $1,000s) | (Predecessor) | |||||||
| Net income | $ | 16,419 | $ | 8,419 | ||||
| Depreciation and amortization | 28,558 | 27,488 | ||||||
| Gain from Sale of Real Estate Investments | - | (3,842 | ) | |||||
| Funds from Operations | 44,977 | 32,065 | ||||||
| Adjustments to FFO: | ||||||||
| (Credit) Provision for doubtful accounts* | (5,636 | ) | 5,128 | |||||
| Straight-line rent | (272 | ) | (2,032 | ) | ||||
| Straight-line rent receivable write-off** | 1,075 | - | ||||||
| Foreign currency transaction loss | 10,932 | 8,775 | ||||||
| Funds from Operations, as Adjusted | $ | 51,076 | $ | 43,936 | ||||
* During the year ended December 31, 2022, the Company recovered $4.4 million in cash with respect to foreclosure sales of assets in Massachusetts. In addition, the Company recognized $1.2 million with respect to a foreclosed property in Massachusetts.
** The Company recognized a loss of $1,075,000 in the second quarter of 2022 due to the write-off of straight-line rent receivables related to the Western Illinois facilities
Strawberry Fields is a REIT that invests in the long-term healthcare industry, primarily in skilled nursing facilities. Its portfolio of assets is operated by a diverse group of healthcare companies, predominantly in a triple-net lease structure.
Cover |
Mar. 10, 2023 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K/A |
| Amendment Flag | true |
| Amendment Description | The Company is amending Item 8.01 of the Current Report on Form 8-K filed on March 9, 2023 (the “Original Form 8-K”) solely to correct the reference to the record date for the cash dividend of $0.11 per share declared on March 6, 2023. The Original Form 8-K incorrectly stated the record date as March 10, 2023. The correct record date is March 20, 2023. The dividend will be paid in March 31, 2023. The Company issued a press release with respect to the correction, which is furnished as Exhibit 99.2 |
| Document Period End Date | Mar. 10, 2023 |
| Entity File Number | 000-56451 |
| Entity Registrant Name | Strawberry Fields REIT, Inc. |
| Entity Central Index Key | 0001782430 |
| Entity Tax Identification Number | 84-2336054 |
| Entity Incorporation, State or Country Code | MD |
| Entity Address, Address Line One | 6101 Nimtz Parkway |
| Entity Address, City or Town | South Bend |
| Entity Address, State or Province | IN |
| Entity Address, Postal Zip Code | 46628 |
| City Area Code | (574) |
| Local Phone Number | 807-0800 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common stock, $0.00001 par value |
| Trading Symbol | STRW |
| Security Exchange Name | NYSEAMER |
| Entity Emerging Growth Company | true |
| Elected Not To Use the Extended Transition Period | false |
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