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    STRW
    Earnings call· Jun 2026(Q2 FY26)

    Strawberry Fields REIT Q2 FY26 earnings call STRW

    Aug 7, 2026 Source

    Executive summary

    Strawberry Fields REIT Q2 FY26 — Strong Rent Collection & Strategic Financing

    Strawberry Fields REIT reported a quarter marked by perfect rent collection and strategic debt refinancing, including a new $300 million credit facility. Despite a challenging and unpredictable deal market, the company is actively pursuing acquisitions, with a significant pipeline expected to close by year-end. Management emphasized its strong AFFO growth and low payout ratio, positioning the company for continued internal capital generation and portfolio expansion, aiming to close its valuation gap with peers.

    Highlights

    5

    • The company collected 100% of its contractual rents during the quarter.

    • Closed on a new $300 million corporate credit facility, comprising a $100 million term loan and a $200 million revolving line of credit.

    • Projected 2026 AFFO is $73.9 million, representing an 11% compound annual growth rate.

    • Projected 2026 Adjusted EBITDA is $135.7 million, representing a 50% compound annual growth rate.

    • Maintained a low AFFO payout ratio of 50.6%, allowing for internal capital generation for growth.

    Concerns

    4

    • General and administrative expenses were higher due to nearly $800k in one-time closing costs and increased corporate salaries.

    • The deal market was characterized as "wonky" and erratic, with deals falling apart or experiencing delays due to complex operational transitions and unexpected issues.

    • The company's stock is currently trading at a 40% discount to its peer average, despite strong operational metrics.

    • Equity was lower year-over-year primarily due to a decline in accumulated other comprehensive income related to foreign currency translation adjustments.

    Guidance & targets

    5
    CategoryTargetConfidence
    Acquisition volume
    $100M-$150M
    medium materiality
    Medium
    Real estate closures from pipeline
    about $130 million
    medium materiality
    High
    AFFO
    closer to 80, 82 or something like that, 81, 82
    high materiality
    Medium
    Annual income growth (long-term)
    $100M-$150M minimum
    medium materiality
    High
    Annual income growth (long-term)
    $200M
    medium materiality
    Medium

    Operational metrics

    40
    Total assets growth
    2.1%YoY
    Q2 FY26

    Increase in total assets compared to June 30th, 2025.

    Revenue growth
    6.4%YoY
    6 months ended July 2026

    Increase in revenue compared to June 30th, 2025, driven by timing and integration of properties acquired in 2025.

    Q2 Revenue increase
    $2.2MYoY
    Q2 FY26

    Increase in Q2 revenue compared to Q2 2025.

    Net income per share
    $0.33vs $0.29/share prior year
    6 months ended July 2026

    Net income per share for the six months ended July 2026.

    Q2 Net income
    $8.9Mmarginally higher YoY
    Q2 FY26

    Q2 net income compared to the prior year quarter.

    AFFO
    $73.9M11% CAGR
    FY26

    Projected AFFO for 2026, representing an 11% compound annual growth rate.

    Adjusted EBITDA
    $135.7M50% CAGR
    FY26

    Projected Adjusted EBITDA for 2026, representing a 50% compound annual growth rate.

    Yield on leases
    14.4%
    Q2 FY26

    Current yield on the company's leases.

    Net Debt to Net Asset Ratio
    49.8%
    Q2 FY26

    Company's net debt to net asset ratio as of June 30th, 2026.

    Dividend per share
    $0.17
    Q3 FY26

    Q3 2026 dividend approved by the board of directors, to be paid on September 30th.

    Dividend yield
    4.9%
    Q2 FY26

    Current dividend yield.

    AFFO payout ratio
    50.6%
    Q2 FY26

    AFFO payout ratio as of June 30th, 2026.

    Number of facilities
    142
    Q2 FY26

    Total number of facilities in the portfolio.

    Licensed beds
    15,496
    Q2 FY26

    Total licensed beds across the portfolio.

    Total property value
    >$1.4B
    Q2 FY26

    Calculated property value based on annualized base rents and a 10% cap rate.

    Annualized base rents
    $143M
    Q2 FY26

    Total annualized base rents from the portfolio.

    Remaining average lease term
    6.9
    Q2 FY26

    Average remaining lease term for the portfolio.

    Net Debt/Adjusted EBITDA
    5.7x
    Q2 FY26

    Company's net debt adjusted EBITDA ratio.

    FFO growth
    11%CAGR
    last 5.5 years

    Compound annual growth rate of FFO over the last five and a half years.

    Portfolio growth (10-cap value)
    13%CAGR
    2021 to Q2 FY26

    Compound annual growth rate of portfolio value based on a 10-cap valuation.

    Stock discount to peer average
    40%
    Q2 FY26

    The company's stock is trading at a 40% discount to its peer average multiple.

    SNF-focused portfolio
    92%
    Q2 FY26

    Percentage of the portfolio comprised of skilled nursing homes.

    AFFO per share growth
    11%beating peers
    Q2 FY26

    AFFO per share growth rate, noted as beating all peers.

    Dividend payout ratio (peers)
    50%vs largest peer 87%
    Q2 FY26

    Company's dividend payout ratio compared to its largest peer.

    Total return (projected)
    16%
    FY26

    Projected total return for FY26, combining AFFO per share growth and dividend yield.

    Blended interest rate (debt)
    <6%
    Q2 FY26

    Blended interest rate for the company's debt.

    HUD debt maturity interest rate
    <5%
    Q2 FY26

    Interest rate for HUD debt maturities.

    Leverage
    50%
    Q2 FY26

    Company's target leverage ratio.

    G&A closing costs (one-time)
    <$800k
    Q2 FY26

    One-time closing costs included in G&A expenses for the quarter.

    G&A salary increase (run-rate)
    $250k-$300k
    per quarter

    Quarterly increase in G&A due to corporate salaries, representing a new run rate.

    Israeli bond interest rate (current)
    8%
    Q2 FY26

    Current average interest rate on Israeli bond debt maturing in Q3.

    US debt cost
    6.4%
    Q2 FY26

    Estimated cost of debt in the US market.

    Last Israeli deal rate
    7%
    Q2 FY26

    Interest rate on the last debt deal done in Israel in May.

    Private placement capacity
    $20M-$40M
    Q2 FY26

    Capacity for additional private placements from existing bonds, available in 3 days.

    Average facility size
    108
    Q2 FY26

    Average number of beds per facility in the portfolio.

    Average beds occupied
    83
    Q2 FY26

    Average number of beds occupied per facility.

    Acquisition cap rate
    10%
    Q2 FY26

    The company's target cap rate for acquisitions.

    Lease terms
    10-year lease or two 5-year renewals
    Q2 FY26

    Typical lease structure for newly acquired properties.

    Annual rent increases
    3%
    Q2 FY26

    Typical annual rent increase rate for most of the portfolio.

    Projected ROE
    12%
    Q2 FY26

    Projected Return on Equity, considering 50% leverage and a 10% cap rate.

    Industry KPIs

    4
    MetricValueDetails
    Coverage ratios2.17xx
    Senior housing occupancy77%%
    Operator tenant concentration16consultants
    Investment volume and sourcing mix$10.4 millionUSD

    Orderbook & backlog

    3
    Acquisition pipeline>$225 millionQ2 FY26

    $130 million expected to close by year-end FY26

    Israeli bond refinancing (minimum)$55 millionQ2 FY26

    from $160 million equivalent debt maturing in Q3 FY26

    Israeli bond refinancing (maximum)$160 millionQ2 FY26

    potential raise for debt maturing in Q3 FY26

    Deals & partnerships

    4
    Existing master lease tenant in MissouriAcquisition of hospital campus (60-bed hospital, 99-bed skilled nursing facility, ancillary medical office buildings)$10.4 million

    The acquisition is near Kansas City, Missouri, and will be added to an existing master lease. Expected to be funded from the balance sheet.

    New partnerSale-leaseback agreement in a new state

    This partner is new to the company but has a strong, long-standing business in their single sector. They are transitioning to a sale-leaseback model.

    New tenantAcquisition of a brand new portfolio in a new state

    This deal involves a new state and a new tenant for the company, with the operator known to be strong.

    Multiple large groupsPotential absorption of peer-level companies/groupsup to $4 billionwithin 10 years

    Ongoing discussions with friends/disciples in the industry who may merge into Strawberry Fields REIT to gain public market access and board seats, rather than pursuing their own IPOs. This represents a significant long-term growth channel.

    Capital programs

    1
    Corporate Credit Facilityclosed$300 million
    Start: June 18th, 2026

    Benefit: $100M term loan, $200M revolving line of credit

    Used to refinance existing secured bank debt; remainder available to support acquisition growth. Initial three-year terms with two one-year extension options. Rate SOFR + 2.75%.

    Risks & headwinds

    4
    Erratic deal market and acquisition delaysQ2 FY26, ongoing

    Deals falling apart or experiencing delays, requiring multiple re-contracting attempts.

    Mitigation: Maintaining disciplined 10-cap acquisition strategy; leveraging strong tenant relationships; management acting as 'psychiatrist' to sellers to navigate operational transition complexities.

    Stock valuation discount to peersQ2 FY26, ongoing

    40% discount to peer average multiple.

    Mitigation: Consistent strong quarterly results, reliable dividend, active participation in conferences, and meeting with investors to highlight company strengths (SNF focus, AFFO growth, low payout ratio).

    Foreign currency translation effectsQ2 FY26

    Decline in accumulated other comprehensive income related to foreign currency translation adjustments.

    Mitigation: Strategic refinancing of Israeli bonds, considering currency fluctuations to minimize realized losses and potentially benefit from future dollar appreciation against the shekel.

    G&A expense increaseQ2 FY26 (one-time), ongoing (run-rate)

    <$800k in one-time closing costs; $250k-$300k per quarter in higher corporate salaries.

    Mitigation: One-time costs are non-recurring; salary increases reflect full staffing and will stabilize, with only one additional asset manager expected for future growth.

    What to watch in Q3 FY26

    5

    AFFO growth for FY27

    next year (FY27)
    CurrentFY26 AFFO $73.9M
    TargetFY27 AFFO $80M-$82M

    Why it matters

    Verifying this growth will confirm the impact of Q4 FY26 acquisitions and the company's ability to drive per-share earnings.

    I mean, I think if everything we're working on were to come to fruition and work out, yes, that would make sense. 155, 160 would be top line, and the bottom line would be from 74.5 or so to probably closer to 80, 82 or something like that, 81, 82.

    Q&A highlights

    8

    To what extent does the projected $1.33 FFO per share for FY26 account for potential acquisitions in the back half of the year, or will those closures primarily impact next year's numbers?

    The $1.33 FFO is based on annualizing current FFO. While the Q3 KC acquisition will incrementally help, the larger deals expected in late Q4 will primarily impact FY27 FFO per share. Management expects FY27 AFFO to increase from $74.5M to $80M-$82M.

    “The $1.33 is annualizing our current FFO for the year. The acquisition in Missouri that we're going to be closing, hopefully during this quarter, should move it up incrementally. But realistically, these new deals that we're looking at are going to be towards later in Q4. I expect it to have the biggest effect on our FFO per share.”

    asked by Richard Anderson · answered by Jeffrey Bajtner

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Debt Restructuring and Liquidity

    Strawberry Fields REIT successfully closed a new $300 million corporate credit facility in Q2 FY26, consisting of a $100 million term loan and a $200 million revolving line of credit. This facility, with initial three-year terms and two one-year extension options at SOFR + 2.75%, was used to refinance existing secured bank debt and provides capital for future acquisitions. The company plans to pay off $160 million in Israeli bonds maturing in Q3 FY26, leveraging cash and potentially new Israeli debt at an improved rate, aiming for a smooth debt maturity profile for several years.

    02

    Acquisition Strategy and Pipeline

    The company maintains a disciplined acquisition strategy, targeting 10-cap assets with 1.25x coverage, primarily focused on expanding master leases in existing or new states. A $10.4 million acquisition of a hospital campus near Kansas City, MO, is expected to close in Q3 FY26, adding to an existing master lease with 3% annual rent increases. The current deal pipeline exceeds $225 million, with management expecting to close approximately $130 million of real estate by year-end, despite a

    03

    Portfolio Composition and Performance

    The portfolio comprises 142 facilities across 10 states, totaling 15,496 licensed beds, with a property value exceeding $1.4 billion based on a 10% cap rate. The portfolio is highly concentrated in skilled nursing facilities (SNF), representing 92% of assets, which management views as a stable, reliable income stream. Tenants continue to perform strongly, evidenced by 100% rent collection and a healthy EBITDA rent coverage of 2.17x as of May 31st, 2026.

    04

    Shareholder Returns and Valuation Gap

    The Board approved a Q3 FY26 dividend of $0.17 per share, reflecting a 4.9% yield and a conservative AFFO payout ratio of 50.6%. Management highlighted the company's 11% AFFO per share growth, which outperforms peers, and its low payout ratio as key differentiators. Despite these strengths, the stock trades at a 40% discount to its peer average, a gap the company is actively working to close through consistent performance and investor engagement.

    05

    Challenges in the Deal Market

    Management described the current deal market as

    06

    Long-Term Growth Vision

    Looking beyond the current year, Strawberry Fields REIT envisions substantial long-term growth, potentially absorbing other operators and expanding its property portfolio by an additional $4 billion over the next decade. This strategy involves integrating smaller, peer-level companies that seek the benefits of a public platform without undergoing the IPO process themselves. The company aims to maintain its core philosophy and disciplined acquisition approach while scaling significantly, targeting annual income growth of $100-$150 million, eventually increasing to $200 million.

    AI-generated summary of the company’s earnings call. Not investment advice.