Strawberry Fields REIT Announces Second Quarter 2024 Operating Results and Declared a Cash Dividend of $0.13 per Common Share
Rhea-AI Summary
Strawberry Fields REIT
- 100% rent collection
- Renewed Indiana Master lease for 10 years with $15.5M base rent
- Completed dual listing on Tel Aviv Stock Exchange
- Acquired a 78-bed facility in Indiana for $5.85M
- Added to Russell 3000 Index
Financial results for Q2 2024 vs Q2 2023:
- FFO: $15.2M vs $12.7M
- AFFO: $14.3M vs $13.4M
- Net income: $7.0M vs $5.7M
- Rental income: $29.2M vs $21.8M
The company declared a $0.13 per share cash dividend payable on September 30, 2024.
Positive
- 100% contractual rent collection in Q2 2024
- Renewed Indiana Master lease for 10 years with $15.5M base rent and 3% annual escalations
- Completed dual listing on Tel Aviv Stock Exchange
- Acquired a 78-bed facility in Indiana for $5.85M
- Added to Russell 3000 Index
- Q2 2024 FFO increased to $15.2M from $12.7M in Q2 2023
- Q2 2024 net income rose to $7.0M from $5.7M in Q2 2023
- Q2 2024 rental income grew to $29.2M from $21.8M in Q2 2023
- Projected straight-line rents increased from $84.2M to $106.7M over 12 months
Negative
- General and administrative expenses increased by 120.9% in Q2 2024 compared to Q2 2023
- Interest expense increased by 45.1% in Q2 2024 compared to Q2 2023
News Market Reaction
On the day this news was published, STRW declined 7.18%, reflecting a notable negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
SOUTH BEND, IN / ACCESSWIRE / August 12, 2024 / Strawberry Fields REIT, Inc. (NYSE American:STRW) (the "Company") reported today its operating results for the quarter ended June 30, 2024.
FINANCIAL HIGHLIGHTS
100% of contractual rents collected.On April 1, 2024 the Company renewed the IN Master lease (original expiration date July 31, 2025) for 10 years with two 5 years options and added to the lease one more entity that was not part of the original lease. The base rent for the first year is
$15.5 million with3% annual escalations.On April 22, 2024 the Company completed its dual listing on the Tel Aviv Stock Exchange. In connection with the dual listing, the Company is traded on two exchanges (NYSE & TASE). Additionally, the Company will be able to issue debt associated with Strawberry Fields REIT Inc.
On June 1, 2024 the Company acquired a property comprised of an 68-bed skilled nursing facility and 10 bed assisted living facility near Georgetown, Indiana. The acquisition was for
$5.85 million and the Company funded the acquisition utilizing cash from the balance sheet. The base rent for the first year is$585 thousand with3% annual escalations.June 28, 2024 the Company was added to the Russell 3000 Index.
For the quarters ended June 30, 2024, and June 30, 2023:
FFO was
$15.2 million and$12.7 million , respectively.AFFO was
$14.3 million and$13.4 million , respectively.Net income was
$7.0 million and$5.7 million , respectively.Rental income received was
$29.2 million and$21.8 million , respectively.
For the six months ended June 30, 2024, and June 30, 2023:
FFO was
$29.3 million and$23.8 million , respectively.AFFO was
$27.4 million and$26.5 million , respectively.Net income was
$13.0 million and$9.8 million , respectively.Rental income received was
$57.1 million and$44.7 million , respectively.
Moishe Gubin, the Company's Chairman & CEO, noted: "During the second quarter of 2024, the Company continued to see strong/accretive growth. Over the 12 months the Company's projected SL rents increased from
Mr. Gubin continued to say "The addition of the Company to the Russell 3000 Index was a big achievement for Strawberry Fields REIT. Being a part of this Index has expanded the Company's shareholder base significantly to both institutional and retail investors. We strive to grow the Company both operationally and through its shareholder base in the future and we are excited to continue down this path."
Q2 2024 Quarterly Results of Operations:
Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023:
Rental revenues: The increase in Rental Revenues of
Depreciation and Amortization: The increase in depreciation and amortization of
General and administrative expenses: The increase in general and administrative expenses of
Interest expense, net: The increase in interest expense of
Miscellaneous expense: The decrease in miscellaneous expense of
Net Income: The increase in net income from
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023:
Rental revenues: The increase in Rental revenue of
Depreciation and Amortization: The increase in depreciation of
Loss on real estate investment impairment: In February 2023, one facility under one of our southern Illinois master leases was closed. The closure was made at the request of the tenant and was mainly for efficiency reasons. This facility was leased under a master lease with two other facilities. The closure did not result in any reduction in the aggregate rent payable under the master lease, which was paid without interruption. However, the closure did result in a write off of the remaining book value of the property and an impairment loss on the P&L. On April 30, 2024, the company sold the property to The Village of Smithton, a municipality in Illinois, and paid off the outstanding mortgage. The sale of the property did not result in any material P&L impact.
General and administrative: The increase in general and administrative of
Interest expense, net: The increase in interest expense of
Miscellaneous Expense: The decrease in miscellaneous expense of
Net Income: The increase in net income to
Dividend
On August 8, 2024, our Board of Directors declared a cash dividend of
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 Annual Report Form 10-K dated March 19, 2024, 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 110 healthcare facilities with an aggregate of 12,500+ beds, located throughout the states of Arkansas, Illinois, Indiana, Kentucky, Michigan, Ohio, Oklahoma, Tennessee and Texas. The 110 healthcare facilities comprise 100 skilled nursing facilities, eight assisted living facilities, and two long-term acute care hospitals.
Investor Relations:
Strawberry Fields REIT, Inc.
IR@sfreit.com
+1 (773) 747-4100 x422
Funds From Operations ("FFO")
The Company believes 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 uses 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. 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 six and three months ended June 30, 2024 and 2023, to net income the most directly comparable GAAP financial measure, for the same periods:
FFO and AFFO
| Six Months Ended June 30, |
|
| Three Months Ended June 30, |
| |||||||||||
| 2024 |
|
| 2023 |
|
| 2024 |
|
| 2023 |
| |||||
(dollars in |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 13,032 |
|
| $ | 9,821 |
|
| $ | 7,040 |
|
| $ | 5,682 |
|
Depreciation and amortization |
|
| 16,324 |
|
|
| 13,975 |
|
|
| 8,228 |
|
|
| 6,987 |
|
Funds from Operations |
|
| 29,356 |
|
|
| 23,796 |
|
|
| 15,268 |
|
|
| 12,669 |
|
Adjustments to FFO: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent |
|
| (1,935 | ) |
|
| (787 | ) |
|
| (967 | ) |
|
| (296 | ) |
Loss on real estate investment impairment |
|
| - |
|
|
| 2,451 |
|
|
| - |
|
|
| - |
|
Contract cancellation expense for proposed financing |
|
| - |
|
|
| 1,000 |
|
|
| - |
|
|
| 1,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Funds from Operations, as Adjusted |
| $ | 27,421 |
|
| $ | 26,460 |
|
| $ | 14,301 |
|
| $ | 13,373 |
|
SOURCE: Strawberry Fields REIT LLC
View the original press release on accesswire.com
FAQ
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