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Related Party Transactions and Economic Dependence
12 Months Ended
Dec. 31, 2023
Related Party Transactions [Abstract]  
Related Party Transactions and Economic Dependence

NOTE 11. Related Party Transactions and Economic Dependence

 

The following entities and individuals are considered to be Related Parties:

 

Moishe Gubin Chairman of the Board
Michael Blisko Director
Nahman Eingal Former Chief Financial Officer
Operating entities See list below

 

Lease Agreements with Related Parties

 

As of December 31, 2023 and 2022, each of the Company’s facilities were leased and operated by separate tenants. Each tenant is an entity that leases the facility from one of the Company’s subsidiaries and operates the facility as a healthcare facility. The Company had 64 tenants out of 107 who were related parties as of December 31, 2023 and 41 tenants out of 79 who were related parties as of December 31, 2022. Most of the lease agreements are triple net leases.

 

On April 4, 2022, an affiliated tenant in Illinois notified the Company of its intent to default with respect to two master lease agreements. Each lease included three nursing home facilities with a combined rent of $225,000 per month, or $2.7 million annually. Default occurred on June 30, 2022, and the Company recognized a loss of $1,075,000 due to the write-offs of straight-line rent receivables during the year ended December 31, 2022. On July 1, 2022, the Company entered into new lease agreements with an unaffiliated third-party operator to lease these properties. The new leases have terms of 10 years each and provide for a combined average base rent of $180,000 per month, or $2.3 million per year, on average, over the life of the leases. In February 2023 one facility under this master lease was closed. The closure was a result of the tenant request and mainly for efficiency reasons. This facility is under a master lease with 5 other facilities and the rent payment is continuing with no interruption and at the same amount.

 

The following table sets forth details of the lease agreements in force between the Company and its subsidiaries and lessees that are related parties:

 

          (1)(2)    (1)(2)                        
        

Related Party Ownership

in Manager/Tenant/

Operator (1) (2)

                   
State  Lessor/
Company
Subsidiary
  Tenant/
Operator
  Moishe
Gubin/Gubin
Enterprises
LP
   Michael
Blisko/Blisko
Enterprises
LP
   Average
annual rent
over life of
lease
   Annual
Escalation
   % of
total rent
   Lease
maturity
  Extension
options
   Master Lease Indiana                                  
IN  1020 West Vine Street Realty, LLC  The Waters of Princeton II, LLC   49.49%   50.51%  $1,045,506    3.00%   1.07%  8/1/2025  2 five year
IN  12803 Lenover Street Realty LLC  The Waters of Dillsboro – Ross Manor II LLC   49.49%   50.51%   1,353,655    3.00%   1.39%  8/1/2025  2 five year
IN  1350 North Todd Drive Realty, LLC  The Waters of Scottsburg II LLC   49.49%   50.51%   1,089,527    3.00%   1.12%  8/1/2025  2 five year
IN  1600 East Liberty Street Realty LLC  The Waters of Covington II LLC   49.49%   50.51%   1,309,634    3.00%   1.35%  8/1/2025  2 five year
IN  1601 Hospital Drive Realty LLC  The Waters of Greencastle II LLC   49.49%   50.51%   1,100,532    3.00%   1.13%  8/1/2025  2 five year
IN  1712 Leland Drive Realty, LLC  The Waters of Huntingburg II LLC   49.49%   50.51%   1,045,506    3.00%   1.07%  8/1/2025  2 five year
IN  2055 Heritage Drive Realty LLC  The Waters of Martinsville II LLC   49.49%   50.51%   1,133,548    3.00%   1.16%  8/1/2025  2 five year
IN  3895 South Keystone Avenue Realty LLC  The Waters of Indianapolis II LLC   49.49%   50.51%   891,431    3.00%   0.92%  8/1/2025  2 five year
IN  405 Rio Vista Lane Realty LLC  The Waters of Rising Sun II LLC   49.49%   50.51%   638,309    3.00%   0.66%  8/1/2025  2 five year
IN  950 Cross Avenue Realty LLC  The Waters of Clifty Falls II LLC   49.49%   50.51%   1,518,735    3.00%   1.56%  8/1/2025  2 five year
IN  958 East Highway 46 Realty LLC  The Waters of Batesville II LLC   49.49%   50.51%   946,458    3.00%   0.97%  8/1/2025  2 five year
IN  2400 Chateau Drive Realty, LLC  The Waters of Muncie II LLC   49.49%   50.51%   792,383    3.00%   0.81%  8/1/2025  2 five year
IN  The Big H2O LLC  The Waters of New Castle II LLC   49.49%   50.51%   726,351    3.00%   0.75%  8/1/2025  2 five year

 

 

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11. Related Party Transactions and Economic Dependence (cont.)

 

Lease Agreements with Related Parties (cont.)

 

          (1)(2)    (1)(2)                        
        

Related Party Ownership

in Manager/Tenant/

Operator (1) (2)

                   
State  Lessor /
Company
Subsidiary
  Tenant/
Operator
  Moishe
Gubin/Gubin
Enterprises
LP
   Michael
Blisko/Blisko
Enterprises
LP
   Average
annual rent
over life of
lease
   Annual
Escalation
   % of
total rent
   Lease
maturity
  Extension
options
   Master Lease Tennessee                                  
TN  115 Woodlawn Drive, LLC  Lakebridge, a Waters Community, LLC   50.00%   50.00%   1,514,820    3.00%   1.55%  8/1/2031  2 five year
TN  146 Buck Creek Road, LLC  The Waters of Roan Highlands, LLC   50.00%   50.00%   1,111,794    3.00%   1.14%  8/1/2031  2 five year
TN  704 5th Avenue East, LLC  The Waters of Springfield, LLC   50.00%   50.00%   917,230    3.00%   0.94%  8/1/2031  2 five year
TN  2501 River Road, LLC  The Waters of Cheatham, LLC   50.00%   50.00%   1,111,794    3.00%   1.14%  8/1/2031  2 five year
TN  202 Enon Springs Road East, LLC  The Waters of Smyrna, LLC   50.00%   50.00%   1,264,666    3.00%   1.30%  8/1/2031  2 five year
TN  140 Technology Lane, LLC  The Waters of Johnson City, LLC   50.00%   50.00%   1,167,384    3.00%   1.20%  8/1/2031  2 five year
TN  835 Union Street, LLC  The Waters of Shelbyville, LLC   50.00%   50.00%   1,334,153    3.00%   1.37%  8/1/2031  2 five year
   Master Lease Tennessee 2                                  
TN  505 North Roan, LLC  Agape Rehabilitation & Nursing Center, A Water’s Community LLC   50.00%   50.00%   1,628,910    3.00%   1.67%  7/1/2031  2 five year
TN  14510 Highway 79, LLC  Waters of McKenzie, A Rehabilitation & Nursing Center, LLC   50.00%   50.00%   1,279,858    3.00%   1.31%  7/1/2031  2 five year
TN  6500 Kirby Gate Boulevard, LLC  Waters of Memphis, A Rehabilitation & Nursing Center, LLC   50.00%   50.00%   1,745,261    3.00%   1.79%  7/1/2031  2 five year
TN  978 Highway 11 South, LLC  Waters of Sweetwater, A Rehabilitation & Nursing Center, LLC   50.00%   50.00%   1,745,261    3.00%   1.79%  7/1/2031  2 five year
TN  2830 Highway 394, LLC  Waters of Bristol, A Rehabilitation & Nursing Center, LLC   50.00%   50.00%   2,327,014    3.00%   2.38%  7/1/2031  2 five year

 

 

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11. Related Party Transactions and Economic Dependence (cont.)

 

Lease Agreements with Related Parties (cont.)

 

          (1)(2)    (1)(2)                        
        

Related Party Ownership

in Manager/Tenant/

Operator (1) (2)

                   
State  Lessor/
Company
Subsidiary
  Tenant/
Operator
  Moishe
Gubin/Gubin
Enterprises
LP
   Michael
Blisko/Blisko
Enterprises
LP
   Average
annual rent
over life of
lease
   Annual
Escalation
  % of
total rent
   Lease
maturity
   Extension
options
   Master Lease Indiana 2                                  
IN  8400 Clearvista Place LLC  The Waters of Castleton SNF, LLC   50.00%   50.00%   804,694   Varies(3)(4)   0.83%   2029   One 3 years and two 5 years
IN  524 Anderson Road LLC  The Waters of Chesterfield SNF, LLC   50.00%   50.00%   423,523   Varies(3)(4)   0.43%   2029   One 3 years and two 5 years
IN  640 West Ellsworth Street LLC  The Waters of Columbia City SNF, LLC   50.00%   50.00%   592,933   Varies(3)(4)   0.61%   2029   One 3 years and two 5 years
IN  11563 West 300 South LLC  The Waters of Dunkirk SNF, LLC   50.00%   50.00%   324,701   Varies(3)(4)   0.33%   2029   One 3 years and two 5 years
IN  5544 East State Boulevard LLC  The Waters of Fort Wayne SNF, LLC   50.00%   50.00%   543,522   Varies(3)(4)   0.56%   2029   One 3 years and two 5 years
IN  548 South 100 West LLC  The Waters of Hartford City SNF, LLC   50.00%   50.00%   458,817   Varies(3)(4)   0.47%   2029   One 3 years and two 5 years
IN  2901 West 37th Avenue LLC  The Waters of Hobart SNF, LLC   50.00%   50.00%   776,459   Varies(3)(4)   0.80%   2029   One 3 years and two 5 years
IN  1500 Grant Street LLC  The Waters of Huntington SNF, LLC   50.00%   50.00%   599,991   Varies(3)(4)   0.62%   2029   One 3 years and two 5 years
IN  787 North Detroit Street LLC  The Waters of LaGrange SNF, LLC   50.00%   50.00%   705,872   Varies(3)(4)   0.72%   2029   One 3 years and two 5 years
IN  981 Beechwood Avenue LLC  The Waters of Middletown SNF, LLC   50.00%   50.00%   423,523   Varies(3)(4)   0.43%   2029   One 3 years and two 5 years
IN  317 Blair Pike LLC  The Waters of Peru SNF, LLC   50.00%   50.00%   917,634   Varies(3)(4)   0.94%   2029   One 3 years and two 5 years
IN  815 West Washington Street LLC  The Waters of Rockport SNF   50.00%   50.00%   423,523   Varies(3)(4)   0.43%   2029   One 3 years and two 5 years
IN  612 East 11th Street LLC  The Waters of Rushville SNF   50.00%   50.00%   691,755   Varies(3)(4)   0.71%   2029   One 3 years and two 5 years

 

 

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11. Related Party Transactions and Economic Dependence (cont.)

 

Lease Agreements with Related Parties (cont.)

 

          (1)(2)    (1)(2)                        
        

Related Party Ownership

in Manager/Tenant/

Operator (1) (2)

                   
State  Lessor/ Company Subsidiary  Tenant/ Operator  Moishe Gubin/Gubin Enterprises LP   Michael Blisko/Blisko Enterprises LP   Average annual rent over life of lease   Annual Escalation  % of total rent   Lease maturity   Extension
options
IN  505 West Wolfe Street LLC  The Waters of Sullivan SNF   50.00%   50.00%   656,461   Varies(3)(4)   0.67%   2029   One 3 years and two 5 years
IN  500 East Pickwick Drive LLC  The Waters of Syracuse SNF   50.00%   50.00%   465,876   Varies(3)(4)   0.48%   2029   One 3 years and two 5 years
IN  300 Fairgrounds Road LLC  The Waters of Tipton SNF   50.00%   50.00%   1,058,808   Varies(3)(4)   1.09%   2029   One 3 years and two 5 years
IN  1900 Alber Street LLC  The Waters of Wabash SNF East   50.00%   50.00%   592,933   Varies(3)(4)   0.61%   2029   One 3 years and two 5 years
IN  1720 Alber Street LLC  The Waters of Wabash SNF West   50.00%   50.00%   310,584   Varies(3)(4)   0.32%   2029   One 3 years and two 5 years
IN  300 North Washington Street LLC  The Waters of Wakarusa SNF   50.00    50.00%   938,810   Varies(3)(4)   0.96%   2029   One 3 years and two 5 years
IN  8400 Clearvista Place LLC  The Waters of Castleton ALF, LLC   50.00    50.00%   381,171   Varies(3)(4)   0.39%   2029   One 3 years and two 5 years
IN  787 North Detroit Street LLC  The Waters of LaGrange ALF, LLC   50.00    50.00%   119,998   Varies(3)(4)   0.12%   2029   One 3 years and two 5 years
IN  612 East 11th Street LLC  The Waters of Rushville ALF, LLC   50.00    50.00%   204,703   Varies(3)(4)   0.21%   2029   One 3 years and two 5 years
IN  505 West Wolfe Street LLC  The Waters of Sullivan ALF, LLC   50.00    50.00%   225,879   Varies(3)(4)   0.23%   2029   One 3 years and two 5 years
IN  300 North Washington Street LLC  The Waters of Wakarusa ALF, LLC   50.00    50.00%   430,582   Varies(3)(4)   0.44%   2029   One 3 years and two 5 years

 

 

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11. Related Party Transactions and Economic Dependence (cont.)

 

Lease Agreements with Related Parties (cont.)

 

          (1)(2)    (1)(2)                        
        

Related Party Ownership

in Manager/Tenant/

Operator (1) (2)

                   
State  Lessor/
Company
Subsidiary
  Manager/
Tenant/
Operator
  Moishe
Gubin/Gubin
Enterprises
LP
   Michael
Blisko/Blisko
Enterprises
LP
   Average
Annual rent
over life of
lease
   Annual
Escalation
   % of
total
rent
   Lease
maturity
  Extension
options
IL  516 West Frech Street, LLC  Parker Rehab & Nursing Center, LLC   50.00%   50.00%   498,351    Varies between $12,000 and $24,000 annually     0.51%  3/31/2031  None
IN  1316 North Tibbs Avenue Realty, LLC  Westpark A Waters Community, LLC   50.00%   50.00%   549,885    3.00%   0.56%  6/1/2024  2 five year
IL  Ambassador Nursing Realty, LLC  Ambassador Nursing and Rehabilitation Center II, LLC   40.00%   40.00%   1,005,313    3.00%   1.03%  2/28/2026  2 five year
IL  Momence Meadows Realty, LLC  Momence Meadows Nursing and Rehabilitation Center, LLC   50.00%   50.00%   1,038,000    None    1.07%  12/30/2025  None
IL  Forest View Nursing Realty, LLC  Forest View Rehabilitation and Nursing Center, LLC   50.00%   50.00%   1,215,483    3.00%   1.25%  12/1/2024  2 five year
IL  Lincoln Park Holdings, LLC  Lakeview Rehabilitation and Nursing Center, LLC   40.00%   40.00%   1,260,000    None     1.29%  5/31/2031  None
IL  Continental Nursing Realty, LLC  Continental Nursing and Rehabilitation Center, LLC   40.00%   40.00%   1,575,348    None     1.62%  3/1/2031  None
IL  Westshire Nursing Realty, LLC  City View Multicare Center, LLC   50.00%   50.00%   1,788,365    3.00%   1.84%  9/1/2025  2 five year
IL  Belhaven Realty, LLC  Belhaven Nursing and Rehabilitation Center, LLC   50.00%   50.00%   2,134,570    3.00%   2.19%  2/28/2026  2 five year
IL  West Suburban Nursing Realty, LLC  West Suburban Nursing and Rehabilitation Center, LLC   40.00%   40.00%   1,961,604    None    2.01%  11/1/2027  None
IN  1585 Perry Worth Road, LLC  The Waters of Lebanon, LLC   50.00%   50.00%   116,678    3.00%   0.12%  6/1/2027  2 five year
IL  Niles Nursing Realty LLC  Niles Nursing & Rehabilitation Center LLC   50.00%   50.00%   2,409,998    3.00%   2.48%  2/28/2026  2 five year
IL  Parkshore Estates Nursing Realty, LLC  Parkshore Estates Nursing and Rehabilitation Center, LLC   50.00%   50.00%   2,454,187    3.00%   2.52%  12/1/2024  2 five year
IL  Midway Neurological and Rehabilitation Realty, LLC  Midway Neurological and Rehabilitation Center, LLC   50.00%   50.00%   2,547,713    3.00%   2.62%  2/28/2026  2 five year
IL  Oak Lawn Nursing Realty, LLC  Oak Lawn Respiratory and Rehab center, LLC   50.00%   50.00%  $637,092    None    0.65%  6/1/2031  None

 

 

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11. Related Party Transactions and Economic Dependence (cont.)

 

Lease Agreements with Related Parties (cont.)

 

(1) The interests of the two listed related parties are not held through any commonly owned holding companies. Mr. Gubin’s interests are held directly/indirectly by Gubin Enterprises LP. Mr. Blisko’s interests are held by Blisko Enterprises LP and New York Boys Management, LLC.
(2) Each of the tenants is a limited liability company. The percentages listed reflect the owners’ percentage ownership of the outstanding membership interests in each tenant.
(3) For the initial two years of the lease there is no escalation, commencing with year three the escalation will be 22.3%, year four the escalation will be 22.8% and for years 5 through maturity the annual escalation will be 2%.
(4) The tenants have an option to buy the properties after 6 years for $127 million.

 

Guarantees from Related Parties

 

As of December 31, 2023 and 2022, Mr. Gubin and Mr. Blisko were not parties to any guarantees of any debt of the Company and its subsidiaries.

 

Balances with Related Parties

 

   2023   2022 
   December 31, 
   2023     2022 
   (amounts in $000s) 
Straight-line rent receivable  $18,921   $11,591 
Tenant portion of replacement reserve  $9,683   $10,227 
Notes receivable  $7,075   $7,816 

 

Payments from Related Parties

 

   2023   2022 
   Years ended December 31, 
   2023   2022 
   (amounts in $000s) 
Rental income received from related parties  $56,988   $54,386 

 

 

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 11. Related Party Transactions and Economic Dependence (cont.)

 

Other Related Party Relationships

 

On December 31, 2023 and 2022, the Company had approximately $1.2 million and $4.7 million, respectively, on deposit with OptimumBank. Mr. Gubin is the Chairman of the Board of OptimumBank.

 

On June 14, 2022, the Company purchased a 7% note receivable with an outstanding balance of $8 million from Infinity Healthcare Management, a company controlled by Mr. Blisko and Mr. Gubin. The note is interest only with a balloon payment due July 1, 2024. The note receivable is due from certain unaffiliated tenants.