Strawberry Fields REIT LLC Q1 2026 Earnings Call Summary

Strategic Performance and Operational Context

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• Performance was characterized by 100% contractual rent collection and a 7.1% revenue increase driven by the integration of properties acquired in 2025.

• Management attributes the lack of closed deals in Q1 to a slow start in the broader market and a commitment to a disciplined 10-cap acquisition model despite rising competition.

• The company maintains a pure-play focus on skilled nursing facilities, which comprise 91.5% of the portfolio, citing deep operational comfort and expertise in the sector.

• Strategic positioning is focused on triple-net leases with annual rent increases, resulting in a portfolio rent coverage of 2.1x as tenant results improve over time.

• Management expressed frustration with the company’s trading multiple of 9.5x, which they believe significantly undervalues the portfolio compared to the peer average of approximately 14x.

• The company utilizes a low AFFO payout ratio of 47% to retain cash for portfolio growth while maintaining leverage within a target band of 45% to 55%.

Strategic Outlook and Guidance Assumptions

• Management maintains a full-year 2026 acquisition target of $100 million to $150 million, with activity expected to be heavily weighted toward the third and fourth quarters.

• The company expects to close a $300 million corporate credit facility in Q2 2026 to refinance secured bank debt and provide dry powder for future acquisitions.

• A strategic debt laddering initiative is underway to refinance 2026 maturities into tranches expiring in 2030 and 2031, ensuring a rolling one-year runway for future refinancings.

• Guidance for 2026 projected AFFO is $75.4 million, which assumes current operations and does not factor in the impact of pending or future acquisitions.

• The acquisition pipeline has expanded to over $325 million, including a pending $80 million portfolio in a new state and a $15 million add-on to an existing master lease.

Structural Changes and Risk Factors

• Foreign currency translation adjustments related to Israeli bonds impacted equity and other comprehensive income, though management intends to hedge this by refinancing in the Israeli market.

• The company identified a ‘mistake’ in previous debt structuring that resulted in clustered maturity dates and prepayment penalties, which the current refinancing strategy aims to correct.

• Management noted the loss of two potential deals to larger REIT peers (Welltower and CareTrust) who offered significantly higher prices after initial handshakes with sellers.

• A $8.6 million acquisition of a hospital campus in Missouri is viewed as a high-value ‘throw-in’ where the nursing facility alone justifies the purchase price.