STRW

Good day. Welcome to the Strawberry Fields REIT first quarter 2026 earnings call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone keypad. I will now hand the call over to Jeffrey Bajtner, Chief Investment Officer. You may begin.

Thank you. Welcome to Strawberry Fields REIT's Q1 2026 earnings call. I am the chief investment officer. Joining me today on the call are Moishe Gubin, our chairman and CEO, and Greg Flamion, our CFO. Earlier today, the company issued its Q1 2026 earnings results, which are available on the company's investor relations website. Participants should be aware that this call is being recorded. Listeners are advised that any forward-looking statements made on today's call are based on management's current expectations, assumptions, and beliefs about Strawberry Fields REIT's business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and may or may not reference other matters affecting the company's business or the businesses of its tenants, including factors that are beyond our control. Additionally, references will be made during the call to non-GAAP financial results.

Investors are encouraged to review these non-GAAP financial measures as well as the explanation and reconciliation of these measures to the comparable GAAP results included on the non-GAAP measure reconciliation page in our investor presentation. Now on to discussing Strawberry Fields REIT and our Q1 2026 performance. I wanted to start by sharing some key highlights for the quarter. During the quarter, the company collected 100% of its contractual rents. The company signed a term sheet for a corporate credit facility with availability of up to $300 million. The facility will be comprised of a $100 million term loan and a $200 million revolving line of credit, both having initial three-year terms and two one-year options. Proceeds from the facility will be used to refinance our existing secured bank debt. The remainder will be available to support acquisition growth.

The rates on the facility will be SOFR plus 2.75. The company expects to close on the facility during Q2 2026. Deal-wise, while we did not close on any deals during the quarter, we were quite busy underwriting deals. As we have detailed in past presentations and investor calls, we have our disciplined acquisition model of 10-cap acquisitions that we have been true to over time and expect to stay on this course for the foreseeable future. I am pleased to report that subsequent to quarter end, the company entered into a contract for the acquisition of a hospital campus comprising of a licensed 60-bed hospital, licensed 99-bed nursing facility, and ancillary medical office buildings near Kansas City, Missouri. The purchase price will be $8.6 million. The company expects to fund the acquisition from the balance sheet.

The hospital campus will be added to an existing master lease of a tenant in Missouri with initial base rents of $860,000 a year and subject to 3% annual rent increases. Yesterday, the board of directors approved the Q2 2026 dividend, which will be $0.17 a share and will be paid on June 30th to shareholders of record on June 16th. Lastly, I'd like to point out that Strawberry Fields REIT remains the closest pure-play skilled nursing REIT in the market, with 91.5% of our facilities being skilled nursing facilities. Additionally, we have not changed our investment approach of all our investments being triple net leases subject to annual rent increases. I would now like to have Greg Flamion, our Chief Financial Officer, discuss the quarter end financials.

Thank you, Jeff, and welcome everyone to the Strawberry Fields first quarter earnings call. Let's begin with a look at our balance sheet. Total assets are $878.6 million, an increase of $43.8 million or 5.2% compared to March 31st, 2025. Our asset growth was driven primarily by recent real estate acquisitions, including the $112 million of acquisitions completed in 2025. On the liabilities and equity side, increases were driven by financing activity associated with our acquisitions, along with the impact of foreign currency translation adjustments. Together, these factors contributed to an overall growth in our debt balances. Equity decline reflecting lower other comprehensive income driven again by foreign currency translation adjustments. Continuing now to the consolidated statement of income. 2026 revenue was $40 million, up $2.7 million compared to March 31st, 2025.

This represents a 7.1% increase, which was driven by the timing and integration of properties acquired in 2025. While we experienced higher revenues, the income growth was offset by higher depreciation in interest expense, which was driven by the new property acquisitions. General administrative expenses were also higher due to professional fees, corporate salaries, and other operating expenses. These increases were offset by lower amortization expense. The results in the year-to-date net income of $9.4 million or $0.17 per share compared to $6.9 million or $0.13 a share in Q1 2025. Finally, I would like to end my presentation with some financial highlights. Our 2026 projected AFFO is $75.4 million, representing an 11.4% compound annual growth rate. The 2026 projected AFFO per share growth is 10.7%.

The 2026 projected adjusted EBITDA is $128.1 million, representing a 13.5% compound annual growth rate. Our yield on leases is 14.2%. The company's net debt to net asset ratio currently sits at 49.0%. As of March 31st, 2026, our dividend was $0.16 a share, representing a 5.4% yield and an AFFO payout of 47.3%. The company recently increased the dividend for Q2 to $0.17 a share. This concludes the financial portion of the earnings call presentation. I'll now turn it back over to Jeffrey Bajtner, who will walk us through the additional portfolio highlights.

Thank you, Greg. As it relates to our portfolio highlights, our portfolio currently has 143 facilities located in 10 states. This is comprised of 131 skilled nursing facilities, 10 assisted living facilities, and two long-term care acute hospitals. Also, these 143 facilities equate to 15,602 licensed beds. The total value of our portfolio at acquisition is $1.1 billion. Our portfolio currently has 17 consultants advising the operators. The weighted average lease term is 7.1 years. I'm proud to report that our tenants continue to do well, and their rent coverage is 2.1. The net debt to EBITDA of the portfolio is 5.6. We continue to collect 100% of our rents. As I mentioned earlier in my remarks, our pipeline remains strong, and it's in excess of $325 million. With that, I'd like to pass it on to Moishe Gubin, our Chairman and CEO, to continue the presentation.

Okay. Thank you, Jeff, and thank you, Greg. As they both have alluded to, really, we are on a nice trajectory in our business. This slide here reflects the last five years and projection of 2026 AFFO growth, which gives you a cumulative growth rate of 11.4%. We're particularly proud of that. The slide after that is base rent and just similar timeframe, similar trajectory, 13.4% growth rate. Our stock price over last year, and we've seen highs, and we're currently trading too low, but we're up from how we ended the quarter, and that was right when I think all that Iran stuff started. Comparatively, between us and our peers, Strawberry is right in the middle. We're 26% on our stock. If you would've bought the stock a year ago till March 31st, 26.4% return. Our trading multiples are still the laggard in the marketplace.

I'm still dumbfounded on why that is. We're at nine and a half times when the average is right around 14 or so, and CareTrust is leading the pack at 21.4%. Our AFFO payout ratio continues to be the lowest from everybody else. That's even, I'm sure, with the increase of our dividend that we announced today, our 47% payout ratio, and that's the lowest of our peers. We find that our best use of our money is staying within the REIT standards, the REIT rules, and using the rest of the cash that we're generating to grow our portfolio. Our dividend yield, this is at March 31st, at $0.16, is 4.9%. Obviously, with an increase, that should be somewhere in the fives, maybe closer to six.

Like Jeff said earlier, we remain a pure play SNF real estate, SNF REIT, and we're gonna stay strict with that, because that's really where our comfort zone is, doing exactly what we're doing, staying very disciplined. We've been preaching this for years and years and years. We're gonna continue to do exactly what we do. In years where there are less deals, we'll just continue to stockpile cash, pay down debt, and save our money for when we get the deals. I think this year we'll still meet our target of between $100 million-$150 million, maybe exceed it. It's been a slow start, but we expect this quarter to really pick up and then actually have a bunch of closings in the third quarter. The next slide just shows our rent coverage from our tenants. That continues to grow.

Every time we close on deals, we're starting every deal at a one and a quarter coverage ratio. Therefore, we're our own worst enemy, where last year we closed $112 million or so or something in 19 properties. You take that, it weighs us down, and as every quarter goes by, our tenants' results improve. Our growth rate per share, we're beating everybody in the marketplace. That's almost inverse for the payout ratio. We should continue to do that. Collectively, between the payout ratio, I mean, the dividend yield and the AFFO per share growth, we're at the end of the day, better return than our peers, averaging out about a 16% return a year. The next slide is probably one of the most important slides, that basically shows you really how you know the math of what we do.

The projected 2026 revenue, AFFO is over $75 million. Again, this is before deals. This has not projected anything out. This is just what we have running today. $75 million, the payout ratio for that is 47%. We retain cash flow close to $40 million. We take that $40 million and we're able to buy. Right now we're at 49% leverage. If we want to stay at 49%, that basically gives us the ability to borrow about $50 million on that. We could buy $90 million without changing our leverage at all. Reality is, we have other cash sitting that we should be able to get more money out the door. That's what we've done until now, and we expect that to continue.

The next slide is probably one of the biggest focuses we have right now. We should be announcing in the next little bit. We intend on refinancing a good portion of this money that's maturing this year. We expect to refinance half of it probably in the next couple of weeks, we'll do the other half probably sometime in August. Where we end up in this situation is that once 2026 ends, we should have almost divided up equally over 4 or 5 years, a laddered debt maturing, so that every year we could be, with a year's runway, be able to sit there and refinance our debts. That should be really good for having a business that can perpetuate long term.

It's interesting to note over here, really, I made a mistake a few years ago, I made all the maturity dates right around the same, it was intentional. The one thing that I missed is that there was a prepayment penalty all the way to the end. To avoid paying prepayment penalties, we've gone down this road where now we have about five months left maturing on most of this debt, we're going to refinance most of it soon and the rest of it in probably a few months. That's this slide. The next slide really just shows how diversified our portfolio is at this point. The only really large consultants or state is Indiana, which happens to be our best state, which is sitting at 25% of the portfolio and 25% of the base rent.

That being said, everything else is pretty even wedges, in high single digits, middle, double digits. That's for an investor that's wanting to have a diversified risk. We don't have a bunch of single assets that where if something goes wrong in one asset, it would hurt us. Most of our stuff is in master leases, as most of you probably know. If we had a problem in one specific state, we'd be able to get through everything without there being anything really big as a risk. Next slide. This really talks about where we're located. As you can tell, we've stayed mainly in the Midwest, and we, God willing, will be announcing a deal for a new state in the Midwest in hopefully the next couple weeks. It's good. Business is good.

We're collecting all our rents, like I think Jeff said earlier. Business is good. We have no issues. On our last slide for today, after this we'll hand it off to the moderator to take questions from the audience. This really is one of my favorites because it's in simple English. If you look at three months ended March 31st, 2026 versus 2025, you see our net income, went up $2.5 million. FFO, $2.7 million, AFFO, $2 million or so. That's what it's all about, really showing at the end of the day, the $75 million of annualized AFFO expected. The graph to the right, the financials to the right is EBITDA. Again, same story. Just adding back depreciation, amortization, and interest to come up with the EBITDA number.

We went up $2.3 million or so and adjusted EBITDA a little bit less than $2 million. I'm super proud of all this. With that, I will pass this back to the moderator to take our new questions.

Thank you. Ladies and gentlemen, as a reminder, to ask a question at this time, you will need to press star 11 on your telephone keypad and wait for your name to be announced. Please stand by while we compile the attendee roster. Our first question will come from the line of Richard Anderson with Cantor Fitzgerald. Your line is now open.

Hey, good morning, everyone.

Good morning.

In mentioning the pipeline growing, I do see last quarter it was 250, now it's 325. I'm curious what the additions were, not just the $75 million, but in form. You did something this in the second quarter with a hospital campus and some medical office. I'm curious if that will be more of the mix of stuff that you do going forward rather than just pure play skilled nursing. I'm just curious, your mindset along that line.

Rich, thank you for your question. Happy to hear your voice. Hope to see you at NAREIT. I would say that no, we're going to stick with nursing homes. Most of our deals that we're close to getting offers accepted on are skilled nursing facilities, and a few of them are new states for us. Yeah, the increase of the pipeline is deals that are just slow to get done. A lot of times people would get disinterested, but we sit there and we just keep working it, and we follow up with people, to the testament of Jeff here on the call. It's persistency and staying with them, and there's some deals, and just lately it seemed like deals are taking slower.

We had a deal that we signed up. Actually, CareTrust came and stole it from us, and that would've been a nice deal for us. They offered like $25 million more than us, which is crazy because the other people had already accepted our offer. That being said, no, we don't want to change what we're doing. This hospital MOB deal comes with a nursing home. We found value that the purchase price we're paying, the hospital and the MOB basically are a throw-in. The nursing home itself had more value than what we're paying. We feel like we're getting a great deal. Our operator that's taking it from us is somebody that has experience, the doctor practice, a physician practice, and we feel it's going to be a nice addition to our portfolio.

Okay.

And-

I would add to Moish's point there that, I mean, this number is almost like a living and breathing number. We evaluate the pipeline every week. The only items that are really being included with this are just deals that we think there is an opportunity to complete. As Moish said, I mean, this has been some deals that have been sitting there over time, but also the SNF deal market has been picking up steam, I'd say, in the past month. We're looking at deals, as Moish said, in new states, existing states, and we're excited to see what we can do the rest of this year.

Okay. My second question, you mentioned CareTrust. How typical are you running into REIT peers in terms of competitive processes to get deals done? Is that sort of an anomaly, or are you seeing some name brand folks that we all know and love out there with you're competing with? Thanks.

Yeah. Historically, we've never ran up against them.

Right.

In the last year or two, as we're trying to I mean, we look at every deal, but as we try to do bigger deals, just so that we figured the marketplace maybe would be more excited about our stock and who we are if we can announce bigger deals and do bigger deals. All with the same metrics, exactly how we buy, the same 10 cap, 10% cash and cash return day one. Our regular routine and rules of how we buy. When it gets these bigger deals, which was our original thought, which was years ago, is that's where the competitive bids are coming in, and we lost one deal to Welltower, and we lost one deal to CareTrust. That was after we basically had a handshake with the seller.

You spend so much time on these things, and then someone else comes in and says, "Okay, I'll just throw more money at it." We're just going to keep doing what we're doing. We're not changing our model to pay more. I'm not going to get disinterested to stop looking at the bigger deals. I think there's a benefit. I love CareTrust, and I love Dave Sedgwick, and I've said that probably 1,000 times. I just think that we offer something on a personal level with a lot of the sellers. We should be able to pull down these deals, and I would say that it hopefully will be an anomaly that we lost a few deals to the bigger boys.

Yeah. Okay. Thanks for the honesty as always, Moish.

Always, Rich. That's how I roll. Thank you.

Thank you. Our next question coming from the line of Gaurav Mehta with Alliance Global Partners. Your line is now open.

Yeah, thank you. I wanted to ask you on the acquisition pipeline, I think on the last earnings call, you had mentioned the target of $100 million-$150 million of acquisition this year. Given that you had a slow start in Q1, are you still hoping to hit that target?

Yeah. 100%. I'm hopeful that the third quarter will close somewhere in the $90 million to close to $100 million range. I'm hoping that in the fourth quarter, we'll have another $15 million to $30 million or $40 million, unless something else pops up. Right now we're looking at everything's gonna get loaded into third quarter and fourth quarter, and we should hit easily the $100 million, and hopefully we should do and break $150 million.

For the third quarter, $90 million-$100 million, are you guys looking at a portfolio?

Yeah, we have a deal that we didn't announce yet that should be in the 80s for a group of homes in a new state. We have this deal in Missouri that we've announced. We have another deal that we also didn't announce that's going to also add to a master lease in a state we're already in. We had a $15 million deal. Between those three deals alone, you're looking at $107 million-$108 million. We have some other things. We got a portfolio elsewhere with a new-ish, but someone who's a tenant of ours or will be a tenant of ours real soon. Another package that we're looking at with them. If that deal hits, that'll get us to about $145 or $150 or so.

The good news is we will have our line of credit up and running by the end of this month. We're going to have a new bond issued next week or in the next two weeks in Israel to basically kick the can down the road on some of our debt. We'll have availability between the line of credit, and without doing an ATM, without doing a fund raise, without taking on any other additional debt, we have the ability, based on our just available borrowings, in terms of cash in our books, we'll have about $150 million or so of availability or right around. We have the cash to be able to do all this stuff and keep ourselves in the same leverage band that we're in right now.

Right now we're at 49%, which is right basically in the middle of where we want to be. I think we're in a good spot. I got to kind of plan it out better for future years that we have stuff that we push into first quarter. When we come to the first quarter call, I can say, "Hey, we closed at least this, that, or the other thing." Sounds a little better than, "Well, we had a great quarter. We made a lot of money. We're doing great. We're collecting 100%," which also sounds good, by the way. I think it would sound better if I would add a deal closing in the first quarter that I could be able to walk around like a peacock about it, but it is what it is.

All right. Thanks for those details. As a follow-up, I wanted to ask you, in the earnings release, you talked about investing some time in different processes within the company this quarter. Can you maybe provide some color on what those processes were?

Yeah. What we were trying to refer to is, I think we're referring to the refinancing and cleaning up our debt. A big portion of our debt is sitting in Israeli bonds, which I'm proud of. I like the relationship we have with the Israeli market. Our time and effort has been on creating a couple of new series that we'll have in Israel to clean up the three series that we're having that mature this year. The other thing has been creating the line of credit with the bank, which is something that our peers all have.

We thought maybe that that was one of the issues that investors maybe think about, is that when they look at our company, they go, "Well, we don't have the dry powder to be able to close on certain deals." We wanted to be able to have these lines of credit so we could be able to tell potential investors, "No, we have plenty of dry powder." Everyone who knows me and knows our business knows that it hasn't been a deal that we've made that we couldn't close. Maybe an investor that doesn't know that or hadn't had a chance to speak to me, or one of my guys, that they might not have known that.

Therefore, we want to be able to have that so that when we put that into the queue and future press releases, we're able to say, "Yeah, we just have this line of credit that we could draw on." We went to the public, sold stock to pay down debt and keep ourselves between 45%-55% on the leverage side. That's basically what we've been working on outside of, I'm always looking at deals. It was just cleaning up our debt stack and the fundamentals of our balance sheet so that going forward, we'll have a normal laddered debt maturity, and we'll have a line of credit that's just there for us to be able to use when we need to buy something.

All right. Thanks for those details. That's all I have.

Thanks, Gaurav. Hopefully we'll see you at NAREIT as well. Thanks, guys.

Thank you. Our next question coming from the line of John Massocca with B. Riley Securities. Your line is now open.

Hi, everyone. Good afternoon. Good morning. Keep going back to term loan. Post-closing, what's the appetite for, sticking on the term loan side, swapping out any of that for a fixed rate versus leaving draws on that floating?

That's an interesting question. Elijah. Well done, John. You didn't stump me. I just haven't thought about it. I think when you're in an interest rate environment that most people expect to be either At this point, the way the economy is running, it seems like it's going to remain stable. Interest rates are definitely not going up. Usually when you have that, you usually don't want to lock in fixed. From my perspective, I hadn't given thought, so maybe it's something I'm going to think about. I think that at this point, in a declining rate environment, I think it's probably not wise for me to do fixed. It's something to think about, and I appreciate the question. In years past, we relied on HUD being the exit for our debt, and then that's long-term 40-year money.

In the last few years, since COVID-19, the way HUD's been as far as lending and our relationship specifically with HUD has been, I don't know the right word. I don't want to put an adjective on it that makes anyone nervous, but it's just like we're not going anywhere. It's stagnant, that relationship. It's sort of I didn't have to think about where to place the long-term debt and then to lock things in for a fixed rate. That's a great question because that's something now that has to be in the forefront for us to think about. I think we're kind of hedged because of the declining rate environment, which is, that's my prognosis. I could be completely wrong. I mean, of course, I could always be completely wrong. That's my thought, and my background is a little bit banking as well.

In the banking world, we're thinking that it's the same thing, stable to declining rate environment. I think I answered your question, John. I don't know.

That's helpful color. It sounds like still in the market, with potentially new Israeli bonds or at least refinancing the existing Israeli bonds. What's pricing look like on that today as you work through those? I guess how would you think about maturity dates or term on that debt? Because it sounds like you're going to probably break up the refinancing into a couple of different tranches. Just curious how that's shaping out as you start the process or work through the process, I should say, today.

Yeah. We're towards the end of the process, it's a great question. Very astute. I love it. It's about four-and-a-half-year money. The pricing today is about 685 or so. You got to add in a little bit in the fees, I don't think anyone ever mentions that on any of these calls, so I'm not sure if I'm supposed to talk about that or not. The actual interest rate is going to be about 685, four-and-a-half-year money expiring the end of 2030. Then when we do the second tranche in August, September, that'll be expiring sometime in maybe June 30th or 31.

The idea for all of this is the corrective measure for my mistake that I made a few years ago is all of it's going to have a prepayment holiday for the last 6 months for me to be able to refinance it, instead of going closer to the wire, to be able to refinance it earlier in the mix. Just on that topic, the line of credit and term loan that we created with the conventional bank, those are going to have two one-year extensions at the end of them, so that during those two one-year extensions, so during the first one-year extension, that'll be the time that we work on the extension or the new debt to replace that. That also ends in 5 years.

The way we're positioning it is we're kicking the can of 2026 money and part of 2028 money, and we're ending up with half in 2030 and half in 2031, basically. Comes the stuff that's going to mature in 2027, we could start working on now to approach the 2032. We'll just start on a rolling maturity ladder of one year at a time that we could just kick the can 5 years down on each thing. As we grow in what we do, then that tranche will just have the additional of the new stuff together with that and kind of push it down 5 years. I hope that makes sense.

My idea, and I'm not planning on going anywhere, God willing, God keeps me alive and healthy, and that the shareholders want me to keep leading them and keep doing this, is that I want to create all these processes that the business is able to be perpetuated long term, so that the normal maturities every year becomes a process. We have to refinance this year's batch of debt that's maturing, push it down 5 years, and have that rolling every year as a normal routine. Same thing with all the other processes that we have in place with how we buy, and just even IR, how we deal with the public and all of these things. I want the process to be so clear and clean that we should be able to perpetuate it on a regular routine.

Not to be robotic, but to be able to be reliable and credible. I think that answers.

Maybe switching gears a little bit. In terms of potential acquisition in a new state, is that with an existing consultant relationship or a new one? I guess, what's the appetite for some of the existing consultant relationships to try to grow here in the current market?

Starting point of that question is that our relationships with our tenants are amazing. We don't have any negative communication or relationships. They're all fantastic. I mean, all of us, I consider everybody part of the family, and it's really good. From our current roster of tenants, to the folks in Oklahoma, we're growing with them. We've consistently been buying more deals in Oklahoma. Texas, we're growing with current operators. Missouri, we're growing with current operators. Ohio, over the years, we haven't grown. Believe me, I love those tenants. We just renewed. They've been tenants already now more than 10 years. It was just the relationship hasn't grown, unfortunately, and we're very, very close. I would call us close friends. The newer things for the newer packages, are all brand new operators that are not new to me as human beings.

Some of them are borrowers at my bank. Some of them are just people that have been industry that we've known for many years. We have two new relationships, in two different states that we're starting with now, God willing, that we're going to start with a decent size, between five and 10 homes, at each portfolio. God willing, it should be great. Again, if any deals that come along, we have a commitment between our tenant and us that we're looking. Out of the 10 states we're in, there's probably five or six of them that we want to grow in. We don't want to grow with the related party stuff. That's been diminishing, and that's down to 46% of the portfolio, and we should be announcing something soon that's going to then further dilute that down.

Yeah, I guess that's something that we should bring up in our presentations. Our relationships with our tenants are fantastic. Yes, we would grow with almost all of them if we could.

I would add to that, 90% of our facilities are in master leases right now. The best way to grow is just once the table's set with that master lease, it's just very easy to keep on adding facilities. As we've been doing that, as Moishe said, in Oklahoma, Missouri the past year, it's been very good to both us and the tenant.

Okay. I appreciate all that detail. That's it for me. Thank you very much.

Thank you, John.

Thank you.

Thank you. Our next question coming from the line of Mark Smith with Lake Street Capital Markets. Your line is now open.

Hey, guys.

Mark.

Just wanted to go back a little bit about what you're seeing here for deals. Sounds like a lot of work in Q1, but some that just didn't get across the finish line. Outside of competition, for some of these deals, is there anything else that's kind of changed or that's made it harder to close on some of these?

No, absolutely not. We don't have any issues with cash. We don't have any issues regulatory-wise. I know there's some stories out there a little bit, Elizabeth Warren and a couple of others, are on this issue about healthcare REITs owning nursing homes, but that really has been a lot of talk. I actually called both senators' offices to say, "Hey, let me talk to you and explain it to you." They didn't really have time or want to talk to me. That being said, there's nothing blocking us from doing any deals other than the competitive of the price, and if the deal doesn't underwrite, we remain very disciplined. We're not looking to risk our portfolio on just, what do they call that? A wish, whatever it is, a prayer and a wish, whatever it is, wish and a prayer. We're not looking at doing that.

We're looking to stuff that makes sense, that the math is there, continue with our process and do things the way we do it. It's worked and should continue to work. It's just a slow first quarter for us, unfortunately, as far as portfolio growth.

Okay. I just wanted to ask about just geographical expansion. I know we've talked about the Southeast and some other markets. It does sound like we'll likely see a new state added here soon. It sounds like that's still in the Midwest. Just kind of curious your appetite around more geographic expansion.

Yeah, we got close on a couple deals. Georgia, and if we found deals, which we haven't even seen any deals, Alabama and Mississippi would be great to get down to, or South Carolina. Yeah, where the deals and where we're growing are both gonna be Midwest deals and the increases to our portfolio are most likely gonna be Texas, Oklahoma, maybe a little bit Tennessee, and always if we could find anything in Indiana. We've particularly not wanted to grow in Illinois for many years, because when we started, we were just top-heavy there, and we want to make sure that we have a diversified portfolio. That's kind of our own internal control, as far as growing there. Yeah, no, I would love to grow in the next few years, certainly Iowa, if we can get a deal in Michigan.

We looked at a deal in Michigan at one point. Wisconsin. Stick with that and see where it goes.

Okay, great. Thank you, guys.

You're welcome. Thank you.

Thank you. Our next question coming from the line of Ken Billingsley with Compass Point Research & Trading. Your line is now open.

Thank you. Good afternoon.

Hi, Ken.

Hey, Ken.

Just want to follow up on just kind of comments you were just making. On the competition, you have a big deal that you announced, likely is coming. Of the ones that you lost, what kind of made them go with the competitors? Anything in specific? Anything that you're able to maybe manage in the future with some of these larger deals you're looking at?

Yeah. It's actually an interesting thing. That deal, what made that difference and why we lost that deal, was that was a broker deal. Different than a lot of our deals. A lot of our deals, we know the sellers, and they specifically want to work with us, and they chase us down, and we work with them, and deals get made. The brokers rightfully are looking for top dollar, and they get more of a commission if it's a bigger deal. That deal that we lost was a deal that we spent time working with the broker and the brokers we're very friendly with. These are good people.

At the end of the day, until the ink is dry on those deals, when it's a broker-based deal, someone else could come in with a bigger dollar amount and the broker calls the client and says, "Hey, you could probably still get out of your deal if you want to go take a different deal." In that case, we didn't know the seller at all. The seller took the last minute, this is 11:59 and 58 seconds and a much higher offer, and they took it. The only thing we could do differently there is somehow earlier in the process, get to know the sellers. In our world, the sellers that we buy from are sellers that we've known for 20 years or 10 years, and we're known in the industry. We go to all the events.

We spend a lot of time talking to people. I don't know if we could have done anything different there, other than give a little guilt trip to the broker saying, "You got to be a little nicer and not pull a deal away from us at the last minute." I don't think we could have done anything differently there.

Do you have a sense of what the cap rate went out at on that deal?

Yeah, that's actually the, I guess, not the saving grace or whatever is that. In theory, our portfolio is way undervalued because if everything were traded at the eight and a half cap that someone else is willing to buy these things at, if you reprice my whole portfolio at eight and a half cap, you'd say that I have another couple of hundred million dollars of equity. Yeah, no, I think it traded at an eight and a half cap.

Okay. Last question I have is on the $255 million that's maturing through the remainder of this year. How much of this is going to be refinanced with the Israeli bond tranches that you mentioned versus the $300 million in financing?

If I commit to one thing, the pricing is going to go up. I don't really want to answer that. I would say that from my point of view, my primary desire would be two Israeli bonds to replace the three Israeli bonds. I would do the bond we're doing next week, God willing. The last two bonds we did, we were oversubscribed by 50%. Assuming we have the same oversubscription and people want it, we would probably take the most we could take and then pay down early one of the other bond debts. What that does for us is that it locks in our currency for four or five years, which is a hedge. Today, the dollar versus the shekel, the shekel is strong. We have built into our financial statements a sizable allowance for currency.

I don't want to realize that. If we kick the can down the road four or five years on the currency, then I don't have to realize a loss that we've already expensed. It's OCI, no one looks at it, but nevertheless, it's there. My desire is most likely to go to the Israeli market, assuming that they're going to stay competitive on the pricing, which they should.

Okay. It looks like you have 25, 50 basis points of spread improvement depending on how you structure this.

Yes.

Would that be fair to assume?

Yes. We're going to go from an average rate between 9.1, 6.9, and 5.7, which are the three tranches that have to get refinanced. It'll end up all being at 6.75, 6.85. If we do the commercial loan, we end up being at 6.4, something like that, 6.4, 6.5. Either way, you're talking about an improvement of at least a half a point on a couple hundred million dollars of debt.

Then leaving you with $150 million of dry when all is said and done.

Yeah.

With $150 million of dry powder to work with. Okay.

Yeah. $150, $140. Yeah, 100%.

I think that's another question.

I think it's a good spot to be in at the end of the day.

Agreed.

Thank you. I'm not showing any further questions in the Q&A queue at this time. I will now turn the call back over to Jeff for any closing comments.

Thank you so much. Thank you everyone for joining us. It's always a pleasure hearing everybody's questions. If you have any further questions, please feel free to reach out to Jeff, myself, or Greg. I'd also like to further add, if anyone is interested in listening to the recording from yesterday's annual shareholder meeting, it's up on our website, strawberryfieldsreit.com. Once again, thank you and have a wonderful weekend. Thank you.

This concludes today's conference call.

Thank you.

Thank you for your participation. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Strawberry Fields REIT LLC Fourth Quarter and Year End 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone keypad. I will now hand the call over to Jeff Bajtner, Chief Investment Officer. You may begin.

Thank you, and welcome to Strawberry Fields REIT LLC’s Year End 2025 Earnings Call. I am the Chief Investment Officer, and joining me today on the call are Moishe Gubin, our Chairman and CEO, and Greg Flamion, our CFO. Yesterday, the company issued its Year End 2025 earnings results, which are available on the company’s investor relations website. Participants should be aware that this call is being recorded. Listeners are advised that any forward-looking statements made on today’s call are based on management’s current expectations, assumptions, and beliefs about Strawberry Fields REIT LLC’s business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and may or may not reference other matters affecting the company’s business or the businesses of its tenants, including factors that are beyond its control. Additionally, references will be made during this call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures as well as the explanation and reconciliation of these measures to the comparable GAAP results included on the non-GAAP measure reconciliation page of our investor presentation. And now on to discussing Strawberry Fields REIT LLC and our 2025 performance. I want to start by sharing some key highlights for the year. Throughout 2025, the company collected 100% of its contractual rent. This is something we are very proud of as collecting our rents year in, year out shows our disciplined investment approach works. On 01/01/2025, the company retenanted its 10 Kentucky properties, formerly part of the Landmark master lease. The new tenant, Hill Valley, has a strong background in operating skilled nursing facilities and was a great fit for this portfolio. The new base rents are $23,300,000 a year and are subject to annual increases of 2.5%. The initial lease term is ten years with four five-year extension options. Also in January, the company entered the state of Kansas by acquiring six facilities consisting of 354 beds for $24,000,000. The company entered into a new triple-net master lease with Willie and Michelle Novotny of Advenicare for an initial ten-year term that included two five-year extension options. In June, the company issued 312,000,000 shekel in Series B bonds on the Tel Aviv Stock Exchange, which is approximately $89,500,000. The bonds are unsecured and were issued at par with a fixed interest rate of 6.7%. This was the company’s sixth series it completed on the Tel Aviv Stock Exchange since the company was founded in 2015. And we look forward to maintaining this long-standing relationship. These numbers reflect the success of the company’s disciplined investment approach and our ability to close on deals that are accretive to the balance sheet. I would now like to have Greg Flamion, our Chief Financial Officer, discuss the year-end financials.

Thank you, Jeff. Welcome everyone to the Strawberry Fields REIT LLC fourth quarter earnings call. Let’s begin with a look at our balance sheet. Total assets are $885,000,000, an increase of $97,900,000 or 12.4% compared to 12/31/2024. Our asset growth was driven by a couple of key factors. First is our recent real estate acquisitions. This includes $112,000,000 of acquisitions in 2025. Second is the retenanting of key leases, namely the Landmark master lease into the Kentucky master lease. On the liabilities and equity side, increases were driven by financing activity associated with our acquisitions along with the impact of foreign currency translation adjustments. Together, both of these factors contributed to the overall growth in our debt balances. Equity declined, reflecting lower other comprehensive income driven again by the foreign currency translation adjustments. Continuing now to the consolidated statement of income. 2025 revenue was $155,000,000, up $37,900,000 compared to 12/31/2024. This represents a 32.4% increase, which was driven by the timing integration of properties acquired in 2024 and 2025 and the Landmark to Kentucky master lease retenanting that began in January 2025. While we experienced higher revenues, the income growth was offset by higher depreciation, amortization, and interest expense, which is driven by new property acquisitions. This results in a year-to-date net income of $33,300,000 or $0.60 per share compared to $26,500,000 or $0.57 per share in 2024. Finally, I would like to end my presentation with some financial highlights. Our 2025 AFFO was $72,500,000. This is a growth of 29.8% versus 2024 and represents a 13.3% compound annual growth rate. The 2025 adjusted EBITDA is $125,300,000. This represents a 38.2% increase compared to 2024 and a 13.5% compound annual growth rate. Our net debt to net asset ratio currently sits at 49.5%. As of 12/31/2025, our dividend was $0.16 a share, representing a 4.9% yield and an AFFO payout of 46%. This concludes the financial portion of the earnings call presentation. I will now turn it back to Jeff who will walk us through additional portfolio highlights.

Thank you, Greg. Our portfolio highlights are as follows. Currently, our portfolio has 143 facilities located in 10 states, which comprises 16,602 licensed beds. The total value of our portfolio acquisition is $1,100,000,000. But if you take the value of our portfolio based on the leases, that amount is closer to $1,500,000,000. There are 17 consultants advising our operators. Our weighted-average lease term is 7.2 years. I am happy to report that our tenants continue to do well, and our EBITDARM rent coverage as of November 30 was 2.07. Our net debt to EBITDA is 5.7. As I mentioned earlier, we continue to collect 100% of our rents. And as a final point, our acquisition pipeline remains strong at $250,000,000. As Moishe and I have mentioned in the past, for us to close on a deal it has to meet our disciplined investment approach, which is a 10 cap at acquisition. And with that, I pass it on to Moishe Gubin, our Chairman and CEO, to continue the presentation. Okay. Thank you. Thank you, Jeff. As Jeff mentioned, this was a great year for our

best year we have ever had, and it was a great year for our AFFO growth. We had a 13.3 which is the average growth rate over the last six years, probably from $38,000,000 to $72,000,000. These are really good numbers that we are very proud of. On the next slide, we have base rent. Again, 13.4% growth rate. Almost double like the last one, very similar numbers from $75 in 2020 to $142,000,000 six seventy five. These are good numbers that we are very happy with. And on the next slide, we talk about our stock price, which in December, we hit an all-time high. We got to $14 a share. And we are still way undervalued. We believe that our stock value was, you know, close to $18, $19, $20 a share. Our stock is still straggling behind our peers. But, you know, we figure we will keep doing what we are doing fundamentally. Strong business and, God willing, eventually, everything will get caught up, get caught up to us. You could see on the next slide how the AFFO multiples, for us, we are at the lowest of everybody at 9.5 times. And CareTrust, or even Sabra is at 12.8. And CareTrust is at almost 20 times. They are doing real good. We are happy for them. They are good people. The return on the stock, 30% return this year, that is pretty good. We are happy about that. Though we feel that when the market truly gets to where we are supposed to be, we will see a nicer pop than 30%. That being said, next slide, our AFFO payout ratio continues to be the lowest where we are paying out 47% of our AFFO, using the rest of the money to pay down debt as a placeholder but to be able to use it to buy more assets. Our dividend yield because we are still, you know, the pack—CareTrust, HI, and us—about 5%. And we feel that that is a good place to be. Especially when we are able to take the money, put the money out the door at a 10 cap. Where we could get to a blended return at this point, a blended return of about 17% to 18%, which is what it has been. And we are very happy about that. Really, it is a very calm portfolio, collecting our rents, doing what we are doing, growing when we can. We are still anticipating guidance of being able to grow $100,000,000 to $150,000,000 a year, hope to beat that, and we had a deal that fell through that we were going to announce, that $890,000,000 deal. I was so happy to go get that and get it out of the way earlier in the year. But that fell apart, unfortunately. But, God willing, we will be able to hit our targets of, you know, $100,000,000 to $150,000,000 this year. The next slide really just talks about how we are still the pure-play skilled nursing facility health care REIT. We were recently at a convention and we asked investors and others if they thought we were doing the right thing. And everybody across the board said, no. You keep doing what you are doing. As the pure play, people will gravitate towards you. So we feel like we are going to just keep sticking with our guns in how we do things and what we are buying, and we should be able to continue staying above 90% in skilled nursing facilities. The next slide really just talks about the coverage, our rent coverages. Over two times rent is pretty good. We are happy with that. And, hopefully, that will continue. Our AFFO per share growth, you could see, we are the highest. Proud of that as well. 12.8% over the last five years. It is good. We are running a nice clean business, as you guys know. And we expect things to be able to stay the same or improve going forward. On this slide 12, we are just showing how our debt maturity schedule is currently. In the next few weeks, me and the team are heading to Israel and at the same time, we should be announcing that we are entering into a term sheet with a bank for the unsecured line of credit and term loan, which we talked about over the last few years. So we expect in the next 45 to 60 days to be able to have most of our debt cleaned up and pushed off to have almost equal maturities over the next four or five years. And so we are really happy about that. I have been pushing that for a while. We will have a bunch of availability under our line of credit once it is done—over $100,000,000. So it will help us. Actually, the most important thing that it will probably help us with is that it will be able to tell potential investors that we have cash. We are able to get a deal done. If you are worried about our growth, besides looking at our previous history where we have been growing nicely year over year, they would be able to say, okay. They have the cash to be able to grow. I want to try to get rid of all these impediments so the stock will have less pressure to not improve. Slide 13 has become my favorite slide. This just shows how diversified we are by state, where the largest concentration is Indiana, which is our best state. Which is a good situation to be in. Everybody else is in the low double digits. And you see it is pretty evenly dispersed throughout the states and by consultants in the states. So this is good. Hopefully, this is the year we will add maybe one or two more states. And that will be great. And we will continue to diversify this pie graph. Lastly, for me, slide 14 just shows you—I am color blind, but I know that basically what we do is bring in regional operators, and the color should indicate that through all of our operators and portfolios, we are growing and we are staying in little pockets of each state. And, hopefully, that will continue. And things are going great. The bottom pie graph just continues to drive home the point of how we are the pure-play SNF health care REIT. And we are going to continue to stay the same way that we are. Okay. And with that, I will hand it back to the operator for any questions. I want to thank everybody again for joining us today. And I will answer whatever questions that anybody has.

Thank you. As a reminder, to ask a question at this time, you will need to press *11. Please stand by while we compile the Q&A roster. First question will come from the line of Rich Anderson with Cantor Fitzgerald. Your line is now open.

Hey, good morning, everyone. Great quarter. So if I could ask a sort of mathematical question first. The EBITDARM with an M coverage of 2.07 times, what does that equate to on a DAR basis in your mind?

So what do you guys want to answer? You want me to answer that?

I could get you that in one second. You want to go to the next question? I will get that for you.

Another mathematical one, and then I have a bigger picture one for Moishe. But with the very attractive payout ratio of 47%, what does that equate to from a free cash flow available to you after dividend, which is zero cost of capital essentially? And, you know, where do you see that sort of growing to over the course of time? And what are the pressures on you to have to raise the dividend to maintain some sort of REIT, you know, standard as it relates to dividend payout?

So the number is right around $40,000,000 after everything is said and done that we are stockpiling. But, you know, the pressure based on REIT rules—I mean, we are at about 100% of distribution. So, like, we have room if we wanted to hold back, but you know, as we make more money, we are trying to build up a following in the marketplace that says, okay. We could trust these guys that every year they pay the same or more. And so we want to have an annual increase every year. The bigger fights in the board meetings have been how much the increase should be, whether it be $0.01, $0.02, or more. And, again, I am actually the one who is pushing not to go crazy on the dividend from the point of view of because if, God forbid, we are not able to meet it one time, I do not want to be erratic and then lower it. And I want to be able to always be relied upon that you will know that the dividend, if you are investing in our company, you know you are going to get at least this or more going forward annually. And so that is what I have been protective of. And so far, we have been doing it exactly that way for four years at this point almost, I think. And it has been good. And so, you know, that $40,000,000 equates to being able to buy easily $80,000,000 and whatever else we need to supplement with, we could supplement. Well, first off, since we are paying down a bunch of debt every year, we could draw on the debt to keep our—because our leverage today is below 50% or right around 50%, and we could then still draw on those lines and ratchet back up to 50% and draw on that to be able to close deals. So I think I answered, and good to hear your voice, Rich. Yeah.

And, Jeff, you have an answer for the DAR?

Yes. Our EBITDAR coverage is 1.6. 1.6. Okay. And then last for me, Moishe, the news out there today on Medicare Advantage—sort of flat for next year. Wondering what your exposure is to MA in the portfolio and what concerns you might have that fee-for-service Medicare, to the extent you have any major exposure, is kind of a risk to the industry, if not necessarily directly at you. Thanks.

Yeah. So that is a good question. If you are talking about the context of Strawberry Fields REIT LLC, you know, we do not have any SHOP in our portfolio. We do not have any of our rents that are predicated on results of our tenants and our rent changing up or down as bonus rent or not bonus rent. So we do not suffer from that at all. And the fact that the coverage is a 1.6, like Jeff said, is an EBITDAR—and I would have thought it would have been a little bit lower. But, actually, I am happy that it is 1.6. 2.07 is the number we are actually looking at. But the point is that we do not have any of those risks in our portfolio. And because of the master leases, individual facilities that might be marginal—you know, the overall portfolio—our tenants are doing well. So, you know, a lot of these things are just—they happen one year, and then next year, they will raise the number for the increase, you know, to make up for the year before. So I am not too worried about it. You know, some of the other REITs that are out there, you know, they are more connected to the operator as far as operator results. And they will probably suffer a little bit, but in the grand scheme of things, it will bounce back. You know, this has been the way it has gone. You know? Even administration to administration. Year to year it is the same administration—that is gone. Because then they realize the operators cannot live. They rely on Medicare to help supplement the shortfall that Medicaid has. And, you know, as time has gone on, they have squeezed that the operator makes less. And the operators are okay with that, I guess, today where it is, but it is still—they work in tandem. And when the nursing homes get squeezed too much from the rate from the government, they are not, you know, which where it is short, right? They go back, and then the government fixes it. And so I am not too worried in the grand scheme of things. Again, you know, we are in an industry—we have talked about the silver tsunami. We are in an industry where we are a necessary business. The nursing homes need to take care of people, and people need to be taken care of. The nursing homes are the least expensive model to be able to take care of people. And we provide the role as the REIT to be the landlord and provide the capital so an operator does not have to put the money in and buy the real estate. And, you know, we have a very simple model that has been working so effectively for so many years. And that should hopefully continue.

Great. Thanks very much.

Thank you. Our next question coming from the line of Gaurav Mehta with Alliance Global Partners. Your line is now open.

Yeah. Thank you. Good morning. I wanted to ask about the balance sheet for the 2026 debt maturing. What do you really expect the new rates to be compared with the maturing debt?

So we modeled out that the line of credit debt is going to come back in at SOFR plus 2.70—about SOFR plus 2.65 to 2.75, right around there—and that the bond debt is going to come in around 6.25%. So assuming we pay off the conventional that today is sitting at SOFR plus 3 to SOFR plus 3.25, let us say, as a blended—so that will go from SOFR plus 3 to 3.25 to, we will say, probably 50 basis points above that on that, like, $160,000,000 or so or whatever the number is. And then for the bond debt, we will see a savings of a drop. It is not going to be a big savings, but it will extend the maturity out four or five years, and nice and clean. And it also at this point will be helpful for refinancing that, because then I do not have to deal with the currency. Right now, the dollar is weak and the shekel is strong. And so I need to kick that can down the road so that I am not stuck using dollars to pay off shekel debt. And so because in the grand scheme of things, the shekel will drop at some point, and the dollar will strengthen. It is inevitable. And when that happens, we will make a bunch of money on the currency exchange too.

Alright. That is great color. Second question on the April financials. In the G&A, were there any one-time items that you guys reported? And then going forward, is the run rate for AFFO per share in 4Q the right number?

Greg, you want to answer that?

Sure. So, yeah. In the G&A, we did have, let us just say, a one-time item. We had some additional payroll that came through in Q4 due to additional executive compensation. So that was a little bit higher than what we were expecting to come in, I guess, from earlier on in the year. However, looking at the payroll going forward, we think that it is not going to be any further, right, increases going into 2026. So basically, Gaurav, what the one-time event is I finally got a raise. I have been paid $300,000 a year for the last fifteen years or something like that. They finally gave me—a compensation committee decided to give me—a raise to $700,000, which I think I am still way underpaid. Does not make a difference to me. But reality is that in Q4, they recorded somewhere between—and it went back—they did it retroactively to, like, eighteen months. So I think they recorded about $1,000,000 or $1,100,000 in a one-time thing. Our go forward—you know, we ended the year with an AFFO of $1.30. We should beat that easily in 2026.

Alright. Thank you. That is all I had.

Thank you. Have a good weekend.

Our next question coming from the line of Mark Smith with Lake Street. Your line is now open.

Hi, guys. I wanted to ask first about the acquisition pipeline. Have you seen any changes in this pipeline, either in volume or valuations? And, you know, is the only real potential impediment to continued growth through acquisitions really just access to capital, or any thoughts on kind of continued growth through acquisitions in your pipeline would be great.

So I will answer that, and then Jeff will add to it. Give him a little time to think because he is not as fast and as speedy as I am. So the starting point is we have never had an impediment as far as cash. We are confident, and we know that debt markets—and, you know, I do not want to sell equity at such a cheap price. But reality is we keep track of what our NAV is. And worst case scenario, if we had to sell equity above NAV, it is still accretive. It just does not feel right doing it, but the point is we could always do that. Over the years, we have stayed very disciplined, as you guys know. And, lately, the deals that I am seeing personally are sale-leaseback deals. Seems to be a ton of that. And so this year, likely, which will be a little bit different—it is the same math—but a little bit different of an operator, where it is going to be the same operator in a spot that we could tell you, we could tell somebody, this is what they are doing and this is how they are operating and see how much money they are making. Then we are going to rebalance them to, you know, a 1.25, which is how we underwrite to. And then, you know, as opposed to what we typically had done—not that we were adverse to sale-leasebacks—we typically were just buying and then retenanting. In this case, it is going to be a little bit easier on one side, and the fact that you will have people that have been the operators there for many years—that is what I am seeing. Jeff, you want to add to that?

I mean, I think Moishe is dead on with his view on it. I mean, it is not an issue with access to capital. I mean, the deals are coming in day in, day out. I mean, they are coming in from across the country. But as we said in the past, we are in our 10 states. To add to our existing 10 states, it is very easy to grow the master lease. But finding a new state to go into, we may need a sizable acquisition. And valuation right now—prices have gone up significantly. I mean, especially—I would say last year I was on the East Coast. This year, we are seeing in the heartland of the country—you are seeing prices per bed go to their highest levels that they may have ever been. And for us, with our disciplined approach, we are sticking to our guns, and if a deal makes sense, a deal makes sense. I mean, Moishe has always said, if a deal pencils out, we are going to close it. So that has been the approach that we have been going at. I mean, since I have been with Moishe for about five years now, and there has not been a deal we have not closed. So we are always looking, and we are always looking at different ways we can grow, but it all goes back to the basics. It is a 10 cap acquisition, 1.25 coverage on day one. So as we enter 2026, we are excited to see what is going to come our way. The sale-leasebacks have been very front and center for us, and we look forward to seeing everyone next quarter, and we will hopefully have some deals to report then as well.

Perfect. The other question that I have was really around occupancy—sitting here, I think you guys said like 76%. Just kind of curious your comfort level at that rate and where you maybe see that moving and impact to the model as occupancy maybe moves up or down?

Yeah. So I will answer that. I mean, we have talked about this before. I know that there are REIT analysts and folks that look at a bunch of different, you know, multifamily and other things across the board. In the health care space, the occupancy is not a great gauge of how a portfolio is doing. You know, we are in states—and I have talked about this before—like we are in Oklahoma. In Oklahoma, the average occupancy for the whole state is like 50%. And, rightfully or wrongfully, they want in Oklahoma—they should have a nursing home local for every county, as an example. Similar to Indiana, same way. But Indiana, the average occupancy is like 70%, compared to 50% in Oklahoma. But they did it because they did not want people that wanted to visit their mother in a nursing home to be driving an hour every day to go visit mom. And so you have certain states. So we are in states in the Midwest that are known as low-occupancy places. Now Illinois occupancy averages like in the 90% and, you know, or high 80s. Same with Kentucky, 85%. But Arkansas is a low number. And our operators are doing great there. They are beating the trend and the state average. Indiana is right around how Indiana runs—maybe a little bit lower actually—and not we are in our tenants’ operations. So that being said, our—and, again, our revenue is not based on occupancy because in our case, you know, our we are showing 100% occupied because every building that we have has been leased out, and we get paid a rent no matter how full they are. But that is just the color I want to provide you. I do not know if that helps you or hurts you, but that is—you know, we expect our portfolio is now probably right around or the same or higher than it was before COVID. It has taken a bunch of years to recover. And we are okay with it. I mean, we are really looking more at rent coverage more than occupancy of the tenants.

I would add to that as we are underwriting the portfolio, their occupancy may have been in the 60s, and now four or five years later, their occupancy has gone up, which is ultimately helping their bottom line, giving higher rent coverage. But as Moishe is saying, the likelihood of them being—in other, I would say, verticals of real estate—net lease, multifamily—100% is very important. In this particular case, it is a little less important. It is more just—it goes down to the operations.

It sounds like the big thing to look at is really the collected at 100%. And if you can continue to do that even at occupancy in some states as low as 50%.

Yes. Yeah. Yeah. Because when we buy it, we are not buying it off of we are not buying it off of what could be. We are buying it off of today—where does the deal play out as far as coverage? And, you know, I guess that is the difference between us and maybe multifamily. Where multifamily—they want to charge market rents, and they are assuming something. And they are giving a vacancy rate of 5% or something, and then they are buying off of that. Then they have to build into that. We are not buying into that. We are charging the rent that is a mathematical formula off of what we are paying. And we are praying every day that our tenants do great and raise occupancy because the more coverage they have, the more certainty we have we will get our rent. The more certainty we have that we are going to get our rent, the more certain we are that we can pay a dividend and buy more assets. And the more we do that, the more we know that we are going to make more money. And, you know, wash, rinse, repeat—wash, rinse, repeat—and keep doing it. And that has been what we have done, and that has been effective and successful. And we want to keep doing that.

Excellent. And I know from your presentation, it seems like the demographic trends that you guys call out gives us a long runway. We do not need to really worry about occupancy dropping off because of just demographic trends and aging out.

Yeah. The transcript is not going to catch the fact that all three of us started bobbing our head. Yeah. Exactly. Exactly what you just said. I was going to silver tsunami. It is—you know, reality is if you are really a prognosticator, right, our tenants should—as long as the government does not decide to start being anti-geriatric folks—there is absolutely no reason why our tenants will not have coverages way in excess of, you know, two, three, four times. Because ten years from now, you know, we are still making our 10 cap return with, you know, annual inflationary increases, and they are going to be making—outside of the cost of labor, you know—but their cost of occupancy to be able to have the space to be able to run the nursing home, that is going to stay relatively flat other than small inflationary increases. But they should have their occupancy go up through the roof, certainly in bigger cities. You know? I do not know if Bardstown, Kentucky is going to—now, it happens to be that building is relatively—well, you know, that is maybe a bad example. Like, Elkhorn County—the place is full. But the other places where they are running 60%, 70%, 80%—or 50% in Oklahoma—you know, that number ratchets up to 70%, 80%, 90%. You know? Our coverage is going to be through the roof, and that is really what we want. We want the country to have nursing homes to take care of the residents and be able to take care of the residents when they make money. And for them to make money, they need a landlord that is not too onerous and buys properties effectively at the right pricing and gives them a rent that they could live with. And that is the model we have.

Excellent. That is helpful. Thank you, guys.

You are welcome.

And I am showing no further questions in the Q&A queue at this time. I will now turn the call back over to Jeff for any closing comments.

I would like to thank everyone for joining us on this call. We appreciate you joining us. We appreciate your support. If anybody has any questions or would like to reach out, send us an email at [email protected]. We look forward to seeing you again next quarter. Have a great weekend.

Thank you.

This concludes today’s conference call. Thank you for your participation. You may now disconnect.