Name: Strawberry Fields REIT, Inc. Q1 2024 Earnings Call
Start: 2024-05-14T00:00:00.000Z

Executive Summary

Q1 2024 delivered solid top-line growth and higher GAAP net income: rental income rose 14.8% year over year to $27.8M, FFO increased to $14.1M (+26.6% YoY), while AFFO was flat at $13.1M .
Interest expense surged 60.8% YoY due to Series D bonds and incremental bank debt tied to the Indiana portfolio, partially offsetting revenue gains .
Portfolio momentum continued with a new 10-year master lease on Indiana assets at $14.5M initial annual base rent, 3% annual escalators, and a terminated $127M tenant purchase option (Company paid $18M to induce the new lease), plus new Tennessee and Indiana deals funded with cash .
The Board declared a Q2 dividend of $0.13 per share (paid June 28, 2024), consistent with prior guidance to maintain quarterly dividends in the $0.12–$0.16 range for 2024 and supportive of income-oriented investor interest .

What Went Well and What Went Wrong

Lease restructuring enhanced cash flows and visibility: the replacement Indiana master lease locks in 10 years with 3% escalators and higher rent; original Indiana facilities’ lease also renewed for 10 years effective April 1 .
Growth and asset recycling: commenced leasing two Tennessee skilled nursing facilities (226 beds) with a purchase option intended to be exercised; signed a $5.85M purchase agreement for Georgetown, IN facility, expecting to close June 1, 2024, using cash .
Management tone: “The Company continues to search for accretive deals… and remains disciplined and is using its excess cash to pay down debt,” signaling focus on shareholder returns and balance sheet prudence .

Interest burden rising: interest expense rose $2.9M (+60.8% YoY) driven by Series D bonds, additional bank debt for the Indiana acquisition, and higher floating rates, compressing earnings power despite revenue growth .
D&A headwinds: depreciation climbed $1.0M (+15.5% YoY) tied to the August 2023 Indiana acquisition and new lease amortization, weighing on GAAP results .
Mixed revenue mix: while Indiana and Texas master leases drove rental growth, revenue was offset by lower Landmark master lease receipts, highlighting operator/mix exposure within the portfolio .

Metric	Q2 2023	Q3 2023	Q1 2024
Rental Income ($USD Millions)	$24.3	$25.8	$27.8
GAAP Net Income ($USD Millions)	$5.7	$4.7	$6.0
FFO ($USD Millions)	$12.7	$12.0	$14.1
AFFO ($USD Millions)	$13.4	$11.5	$13.1
Dividend per Share ($USD)	$0.11	$0.12	$0.13
EPS (GAAP, Diluted)	N/A	N/A	N/A

Notes:

Q1 2024 YoY rental income growth: +14.8% driven by new Indiana and Texas master leases; partially offset by Landmark rent declines .
Interest expense up +60.8% YoY on bonds and floating-rate debt .

Segment breakdown: Not disclosed in press release (portfolio-level reporting only).

KPIs

KPI	Q2 2023	Q3 2023	Q1 2024
Contractual Rent Collection Rate (%)	100%	100%	100%
Portfolio Facilities (count)	83 facilities within 79 properties	107 facilities	109 facilities
Major Lease Actions	N/A	Indiana acquisition closed (24 facilities)	New 10-year Indiana master lease (3% escalators), original Indiana lease renewed
Debt Actions	Series D bonds at 9.1% (Jun-2023)	SOFR+3.5% bank loan; 8.83% rate at 9/30/23	Additional Series D bonds ($26.7M gross) at ~7.7% coupon

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per Share	FY 2024	$0.12–$0.16 per quarter	Declared $0.13 for Q2 2024 (paid June 28, 2024)	Maintained within range
Revenue, Margins, OpEx, Tax Rate	FY/Q1 2024	Not provided	Not provided	N/A

No earnings call transcript found for Q1 2024; themes below reflect press releases and filings.

Topic	Previous Mentions (Q2 2023 and Q3 2023)	Current Period (Q1 2024)	Trend
Acquisitions & Master Leases	Q2: Indiana portfolio contract for 24 facilities ; Q3: Indiana acquisition closed; rent coverage improving	New 10-year Indiana master lease with 3% escalators; original Indiana lease renewed; Tennessee lease commenced; Georgetown, IN purchase agreement	Strengthening pipeline and lease visibility
Debt & Interest Costs	Q2: Series D bonds at 9.1% ; Q3: SOFR+3.5% bank loan, rate 8.83%	Additional Series D bonds ($26.7M gross) at ~7.7% coupon; interest expense +60.8% YoY	Rising interest burden despite slightly lower bond coupon
Rent Collection & Coverage	100% rents collected (Q2) ; CEO highlighted improving rent coverage (Q3)	100% rents collected (Q1); mix shift with lower Landmark rent	Stable collections; coverage narrative constructive
Dividend Policy	Q2 dividend $0.11 ; Q3 dividend $0.12 with FY24 guidance $0.12–$0.16	Declared $0.13 for Q2 2024	Upward progression within guided band
Portfolio Scale	Q2 portfolio described as 83 facilities in 79 properties	Q3 increased to 107 facilities	Q1 at 109 facilities

“The Company replaced the master lease… the new lease includes higher rents and the term is for 10 years ensuring steady rents from these facilities into 2034… Deal-wise the Company entered into a few smaller deals… The Company continues to search for accretive deals… Lastly, the Company remains disciplined and is using its excess cash to pay down debt.” — Chairman & CEO Moishe Gubin .
Rental revenue growth of +14.8% YoY driven by new Indiana and Texas master leases; offsets from Landmark master lease lower revenue .
Interest expense increase (+60.8% YoY) tied to Series D bonds, new bank debt for Indiana acquisition, and floating rate increases .

No Q1 2024 earnings call transcript was available in the document set; no Q&A highlights to report.

Wall Street consensus (S&P Global) for Q1 2024 revenue, EPS, and EBITDA was unavailable due to access limits at the time of request; as a result, comparisons to consensus estimates cannot be provided now. If desired, we can refresh when access resumes and add a beat/miss assessment.

Lease upgrades drive durable rent growth: the 10-year Indiana master lease with 3% annual escalators and higher base rents is a structural positive for rental revenue trajectory .
Income stability: 100% contractual rent collection sustained across recent quarters; dividend increased to $0.13 and remains within guided $0.12–$0.16 band, supporting income-focused strategies .
Headwind awareness: interest costs accelerated (+60.8% YoY), reflecting higher-rate debt and incremental borrowings; investors should monitor rate path and refinancing optionality .
Pipeline and optionality: commenced Tennessee lease with intended purchase option exercise and signed Georgetown, IN purchase agreement using cash, indicating continued portfolio expansion without excessive leverage .
Non-GAAP quality: FFO up 26.6% YoY on stronger rental income; AFFO flat, reflecting underlying adjustments (straight-line rent, impairments) and rising interest burden; focus remains on cash generation .
Operator/mix exposure: lower Landmark master lease revenue softened the rental growth profile; diversification across states and operators remains a key risk management lever .
Next catalysts: confirmation of the June 1, 2024 Georgetown closing, further accretive transactions, and potential updates on exercising Tennessee purchase option could support multiple expansion and dividend continuity .