Full Year 2024 Strawberry Fields REIT Inc Earnings Call
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Okay.
Tom: Good morning, My name is Tom and I will be your conference operator today.
Tom: My name is Tom and I will be your conference operator today.
Tom: I would like to welcome everyone to the Strawberry Fields Reit Year End 2024 Earnings Call. All lines have been placed on mute to prevent any background noise.
Tom: I would like to welcome everyone to the Strawberry fields REIT year end 2024 earnings call.
All lines have been placed on mute to prevent any background noise.
Tom: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, you have to press the star key, followed by the number 1 on your telephone keypad.
Tom: After the Speakers' remarks, there will be a question and answer session.
Speaker Change: I would like to ask a question. During this time you have to press star. The Starkey followed by the number one on your telephone keypad I would now like to turn the conference over to Jeff Ritenour, Chief Investment Officer, Sir. Please go ahead.
Jeff Beitner: I would now like to turn the conference over to Jeff Beitner, Chief Investment Officer. Sir, please go ahead. Thank you and welcome to Strawberry Fields Reit, year-end 2024. I am the Chief Investment Officer of the company, and I focus on acquisitions, growing a company's operating base, and investor relations.
Speaker Change: Thank you and welcome to Strawberry fields reach year end 2024 earnings call I am the Chief investment Officer.
Speaker Change: Acquisitions growing our company's operator.
Speaker Change: Provisions.
Jeff Beitner: On the call with me today are Mark Shubin, our Chairman and CEO, and Brad Flanagan, our CFO.
Speaker Change: Paul <unk>, our chairman and CEO and Greg.
Speaker Change: Okay.
Jeff Beitner: On Thursday, the company issued its year-end 2024 results, which is available on the company's investor relations website. Participants should be aware that this call is being recorded, and 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 environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financing, and may or may not reference other matters affecting the company's business or the businesses of its Including factors that are beyond its control. Additionally, references will be made during this call to non-GAAP financial results.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: The linked quarter.
Speaker Change: Any forward looking statements made on today's call.
Speaker Change: <unk> current expectations.
Speaker Change: Okay.
Speaker Change: Got it.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: The key requirements.
Speaker Change: Acquisition.
Speaker Change: We observed.
Speaker Change: It may or may not reference other matters affecting the comp.
Speaker Change: These businesses or the businesses of its patents, including patents that are younger people.
Speaker Change: During this call to non-GAAP.
Jeff Beitner: Investors are encouraged to review these non-GAAP financial measures, as well as explanation and reconciliation of these measures to the comparable GAAP results included on the non-GAAP measure reconciliation page in their investors' report.
Speaker Change: Investors are encouraged to review these measures as well as explanation and reconciliation of these measures to the comparable GAAP results included.
Speaker Change: Our GAAP measure reconciliation page.
Speaker Change: Patient.
Speaker Change: Yeah.
Jeff Beitner: And now our Key Discovery is carbon-8B HD and our 2024 butt. As we look back at 2024, a big takeaway is the work that's being completed and growing the This growth is not just through acquisition of new facilities, but also working with existing tenants and moving existing leases to the company as stable cash flows into the foreseeable future. I'd like to point out some of the numbers which we have in this group. During the year, the company acquired $130.3 million of real estate, growing the portfolio from 109 facilities in 9 states to 124 facilities in 10 states.
Speaker Change: Okay.
Speaker Change: Our performance.
Speaker Change: We look back at 2024 Big takeaway is the work is completed.
Speaker Change: Yeah.
Speaker Change: It is not just through acquisition.
Speaker Change: But also we're working with existing tenants.
Speaker Change: Sure.
Speaker Change: We have stable cash flows into the foreseeable future.
Speaker Change: One of the numbers that you saw before.
Speaker Change: The company acquired.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Nine facilities in nine states to a 144.
Speaker Change: It's a.
Jeff Beitner: Fed wise, this translates from 12,449 beds to 14,186 beds, which is approximately a 14% increase. Through these acquisitions, the company has grown its tenant base from 10 operators to 14. Additionally, the company's base rents increased from $84 million in 2023 to $104 million in 2024. We expect that number to be around $130 million in 2025. As it relates to our existing tenants leases, both of our Indiana master leases were renegotiated for new tenant returns, which will ensure a rent until 2034. We also had a few individual leases that matured and were re-tenanted by an existing tenant into their master lease.
Speaker Change: Bed why this translates into 12400.
Speaker Change: Related that to 14186 beds, which is approximately a 14% increase through these acquisitions. The company has grown its tenant base from 10 operators supporting Additionally, the company's base rates increased from $84 million in 2000 $23 million to $104 million in 2024, do you expect that number to be around 100.
Speaker Change: And $30 million.
Speaker Change: Yes.
Speaker Change: As it relates to our existing tenant leases.
Speaker Change: And with today's release.
Speaker Change: Ernie.
Speaker Change: Looking forward.
Speaker Change: We also.
Speaker Change: Sure.
Speaker Change: Our existing tenants.
Speaker Change: Our actuaries.
Jeff Beitner: Apparently, 88% of our facilities are tied to master leases. For 2025, the company has 6 leases that mature, 4 in Ohio and 2 in Illinois. We are pleased to announce that the tenant for the Ohio facilities has exercised their renewal option for the next 5 years. With these renewed leases and new acquisitions, our average lease term has increased from 4.6 years at the beginning of 2024 to a healthy 7.4 years at the end of the year. It is important to note that this average lease term is based on the initial 10-year lease term of the lease.
80% of our facility.
Speaker Change: We're proud of our required the company at.
Julien: Hey, Julien.
Speaker Change: Yes.
Speaker Change: Our attendance at our Ohio facility.
Speaker Change: Exercise.
Speaker Change: For the next five years.
Speaker Change: Everybody says.
Speaker Change: Our average lease term has increased from four six years with the payment terms are more healthy.
Speaker Change: End of the year. It is important to note that this.
Speaker Change: Average lease terms HR initiatives.
Speaker Change: All of our leases include a student borrower.
Jeff Beitner: Almost all of our leases include at least two 5-year options to extend.
Speaker Change: We are optimistic.
Speaker Change: As it relates to this past year hierarchy.
Jeff Beitner: As it relates to this past year, I want to share some key highlights. During the year, the company collected 100% of its contractual rents.
Sure.
Speaker Change: During the year the company collected 100% of it's contractual rights as we discussed in last quarter's earnings call in July.
Jeff Beitner: As we discussed in last quarter's earnings call, in July, the company filed a registration statement on Form S3 with the Securities and Exchange Commission. In August, the company established an APM program. Through this program, the company began selling shares to the public for the first time, as we initiated on public through a direct listing.
Speaker Change: A reconciliation.
Speaker Change: One of them.
Speaker Change: In August our company is to have an ATM program.
Speaker Change: This program began salaries shares to the public for the first time as the initiative.
Speaker Change: Okay.
Jeff Beitner: In December, the company followed up to the ATM program with our first underwritten public offering of approximately 3.34 million shares of Poundstack for a total gross proceeds of $35 million. In December, the company completed an acquisition with an unaffiliated seller with respect to eight healthcare facilities located in Missouri, our 10th state. The purchase price for the facilities was $87.5 million. The facilities are currently leased under a master lease agreement with a group of third-party tenants. Under the master lease, the tenants currently pay annual rent on a triple net basis. The eight facilities are priced at $1,111.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: And our first underwritten public offering of approximately $3.
Speaker Change: Sure.
Speaker Change: The 4 million new shares of common stock for total gross proceeds of $35 million.
Speaker Change: Some of our competitors, we did an acquisition of an unknown.
Speaker Change: With respect to Ehealth temperature at least.
Speaker Change: In Missouri, our tenants.
Speaker Change: The purchase price.
Speaker Change: It was $87 $5 million.
Speaker Change: These are currently currently lease.
Speaker Change: Third heart attacks.
Speaker Change: The tenant is currently pay annual rate.
Speaker Change: That basis.
Speaker Change: The enterprise 1400 beds.
Jeff Beitner: In December, the company entered into a purchase agreement for six healthcare facilities with $354,000 located in Kansas. The purchase price of the facilities was $24 million. The facilities are leased under a triple net master lease agreement with a group of third-party tenants. The initial lease terms for 10 years includes 2,500...
Speaker Change: Sure.
Speaker Change: Health care facilities.
Speaker Change: <unk> is.
Speaker Change: Located in Canada, the purchase price.
Speaker Change: Okay.
Speaker Change: All of these are these are there are triple net.
Speaker Change: Third party tenants.
Speaker Change: Starts for 10 years and includes two five year options.
Jeff Beitner: company closed the acquisition on January 2, 2025. This acquisition brought the company into its 11th state and increased the overall portfolio to 130 facilities and 14,540 Subsequent to quarter end, our Board of Directors authorized a cash dividend of $0.14 a share. The dividend will be payable on March 31, 2025 to shareholders of record on Monday, March 17, 2025. This dividend will be our 10th consecutive quarter of paying dividends and continues to represent the company's philosophy of showing the market that our dividends can be relied upon.
Speaker Change: The company closed the acquisition on January 2020 back this acquisition brought the company into its a Robyn state and increased overall portfolio to 130 facilities and 14540 beds. Subsequently subsequent to quarter Ed Our board of directors have authorized a cash dividend of 14 cents per share the dividend will be payable.
Speaker Change: March 31, 2025 to shareholders of record on Monday March 17th 20 bag. This dividend will be our 10th consecutive quarter of paying dividends and continues to represent the companys philosophy are showing the market that our dividends can be relied upon.
Greg Flamian: I would now like to have Greg Flamian, our Chief Financial Officer, discuss the year-end financials. Hello, and thank you for attending our end-of-year earnings call. 2024 has been a year of significant portfolio expansion for Strawberry Fields Reit, including the acquisition of our Kansas properties on January 2nd, 2025. We have increased our portfolio by 19.3%, bringing the overall facility count to 130 facilities. This expansion has strengthened our financial position, driving substantial growth in net-fixed asset-related accounts and increasing total assets by 27.7% to $170 million. In addition to the financial growth, this expansion has enhanced our risk diversification across states and operators as we have entered into two new states and established partnerships with new operators.
Greg Fleming: I would now like to have Greg Fleming, our chief financial officer to discuss the year end financials.
Speaker Change: Yes.
Speaker Change: Hello, and thank you for attending our end of the year.
Speaker Change: Earnings call.
Speaker Change: <unk> has been a year of significant portfolio expansion for strawberry fields.
Including the acquisition of our Kansas properties on January <unk> 2025, we have increased our portfolio by 19, 3%, bringing the overall facility count to a 130 facilities.
This expansion has strengthened our financial position driving substantial growth in net fixed asset related accounts and increasing total assets by 27, 7% to $170 million.
Speaker Change: In addition to the financial growth.
Speaker Change: This expansion has enhanced our risk diversification across states and operators as we have entered into two new states and established partnerships with new operators.
Greg Flamian: Additionally, cash and cash equivalents, both restricted and unrestricted, increased due to the financing of the Kansas acquisition and higher reserves associated with financing activities. Our 2024 year growth was supported by multiple funding sources, including $118 million in bond issuances, a new $59 million mortgage facility with Popular Bank, a $33 million equity raise, and proceeds from our After the Market program as well as rental income. The company also strategically reduced debt by paying down $24 million on a higher interest loan. Collectively, these financing activities led to a 23.6% increase in total liabilities, or $134.5 million, while equity rose $36 million, representing a 76.8% year-over-year increase.
Speaker Change: Additionally, cash and cash equivalents, both restricted and unrestricted increased due to the financing of the <unk>.
Speaker Change: Kansas acquisition, and higher reserves associated with financing activities.
Speaker Change: Our 2020.
Speaker Change: Your growth was supported by multiple funding sources, including $118 million in bond issuances, a new $59 million mortgage facility with popular bank, a $33 million equity raise and proceeds from our or after the market program as well as rental income.
Speaker Change: The company also strategically reduced debt by paying down $24 million on higher on a higher interest.
Speaker Change: Collectively these financing activities led to a 23, 6% increase in total liabilities are $134 $5 million, while equity rose $36 million, representing a $76 eight year over year increase.
Speaker Change: Moving to the profit and loss statement.
Greg Flamian: Moving to the Profit and Loss Statement. 2024 was also a year of strong profit growth for Strawberry Fields Reit, revenue increased by $17.3 million, or 17.3%, driven by full-year contributions of the Indiana II Master Lease, which was acquired in Q3 2023, as well as revenue from additional acquisitions completed throughout 2024. Total expenses rose by $3.4 million, or 6.5%, primarily due to higher depreciation and amortization costs, along with increased general and administrative expenses. Interest expense also grew by 8.2 million or 33.4% reflecting the additional expenses incurred to finance the company's portfolio growth. Despite these increases, revenue growth outpaced expenses, resulting in a net income of $26.5 million.
Speaker Change: 2024 was also a year of strong profit growth for Strawberry fields re revenue increased by $17 3 million or 17, 3% driven by full year contributions of the Indiana to Master lease, which was acquired in Q3 2023 as well as revenue from additional acquisitions completed throughout 'twenty.
Speaker Change: 24.
Speaker Change: Total expenses rose by $3 4 million or six 5%, primarily due to higher depreciation and amortization costs, along with increased general and administrative expenses inter.
Speaker Change: Interest expense also grew by $8 2 million or 33, 4%, reflecting the additional expenses incurred to finance the company's portfolio growth. Despite these.
Speaker Change: The increases revenue growth outpaced expenses resulted in a net income of $26 5 million. This is an increase of $6 3 million or 39% compared to the prior year.
Greg Flamian: This is an increase of $6.3 million, or 30.9% compared to the prior year.
Speaker Change: Moving to the financial highlights slide.
Greg Flamian: Moving to the financial highlights slide. Our strong operational performance resulted in an adjusted AFFO of $55.8 million and an adjusted EBITDA of $90.6 million. These metrics demonstrated year-over-year growth with a compound annual growth rate of 12.6 and 8.2% respectively.
Speaker Change: Our strong operational performance resulted in an adjusted <unk> of $55 8 million and an adjusted EBITDA of $99 $6 million.
Speaker Change: These metrics demonstrated year over year growth with a.
Speaker Change: Compound annual growth rate of $12, six and eight 2% respectively.
Greg Flamian: Despite our strategic emphasis on portfolio expansion, we remain committed to delivering value to our shareholders. In 2024, the company increased its dividend from $0.12 per share at the beginning of the year to $0.14 per share by year-end. This represents a 16.6% increase in the annual dividend distribution per share and a 5.3% dividend yield with an AFFO payout of 49.5%.
Speaker Change: Despite our strategic emphasis on portfolio expansion and we remain committed to delivering value to our shareholders in 2020 for the company increased its dividend from <unk> 12 per share at the beginning of the year to <unk> 14 per share by year end.
Speaker Change: This represents a $16 six increase in the annual dividend distribution per share and a five.
Speaker Change: Five 3% dividend yield with an annual payout of 49, 5%.
Speaker Change: And with this much goodwill will continue the presentation with additional 2024 portfolio highlights.
Moisture Group: And with this, Moisture Group will continue the presentation with additional 2024 Portfolio Highlights. the company and heading our way towards getting widely held, adding liquidity to the stock.
Speaker Change: Thank you thank you Greg.
Speaker Change: Yes.
Speaker Change:
Speaker Change: Our owners lies the underlying.
Speaker Change: As the maturity of our company and how we behave.
Speaker Change: No problem.
Speaker Change:
Speaker Change: No.
Speaker Change: Okay.
Speaker Change: Turning to.
Speaker Change: The company and heading our way towards getting widely held adding liquidity to the stock.
Speaker Change: And so I guess for me the biggest highlight of the year was actually doing our first real public offering bringing into institutional shareholders and.
Unnamed Speaker: And so I guess for me, the biggest highlight of the year was actually doing our first real public offering, bringing All of our leases are built that same pathway with the 10-year leases and two 5-year leases. So that 7.2 is far too high and just people are not going to renew leases when there's 6-7 years left. We're going to keep working on that and growing that. Our trailing 12-month lease is Darn. The growth rate on the base rent.
Speaker Change: And that anymore.
Speaker Change: Mobile.
Speaker Change: And for Us.
Speaker Change: That is what we're looking to do.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Working down.
Speaker Change: Got it.
Speaker Change:
Speaker Change: We can.
Speaker Change: Okay.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: One zero.
Speaker Change: All of our leases.
Speaker Change: Thank you.
Five year renewals.
Speaker Change: Well.
Speaker Change: Right.
Speaker Change: Renewal leasing.
Speaker Change: There's seven or so.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Our trailing 12 month EBITDAR.
Speaker Change: Arm.
Speaker Change: Sure.
Speaker Change: Hey, Ross.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Albert.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: So.
Speaker Change: I said earlier.
Speaker Change: Really proud.
Speaker Change: Yes.
Speaker Change: No.
Speaker Change: 31.
Speaker Change: This years very very.
Speaker Change: Yeah.
Speaker Change: The growth rate on the base rent.
Unnamed Speaker: Um We were relatively unknown and trading few shares by appointment at the beginning of 2024. And as the year went on, our volume. and our stock started to grow, and then we did an offer.
Speaker Change: And like we said earlier, we expect that number to be closer to 130.
Speaker Change: One five.
Speaker Change: Okay.
Speaker Change: The growth.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: And this is really really.
Speaker Change: You were relatively unknown and trading few shares.
Speaker Change: By appointment at the beginning of 2024 and as the year went on our volume increased.
Speaker Change: And our stock started to grow.
Speaker Change: And and then we did we did an offering.
Unnamed Speaker: and the stock went down and today today our stock price I believe is trading over $12 a share and hopefully it'll continue uh it'll continue its rise I mean our real goal for today's purpose uh is is for us to be treated like Our ear, our lungs are retarded versus our ears, as you can tell, I mean, this is probably ugly crap, but we've got to have fun with us. investors meeting with analysts and getting the story out there so that the stock of trade we'd like to continue to sell shares through the ATM. You know our real range of floor or grove.
Speaker Change: And.
Speaker Change: The stock went down.
Speaker Change: And today today, our stock price I believe is trading over $12 a share and hopefully it will continue.
Speaker Change: It will continue with rise.
Speaker Change: Gulf.
Yes.
Speaker Change: As it is for us each region.
Speaker Change: We have multiple versions.
Speaker Change: Yes.
Speaker Change: Our CFO.
Speaker Change: God willing.
Speaker Change: Our.
Speaker Change: Sure.
Speaker Change: Five years.
Speaker Change: Probably.
Speaker Change: Got it.
Speaker Change: I'm proud of that.
Speaker Change: Paul.
Speaker Change: Okay.
Speaker Change: No.
Speaker Change: And <unk>.
Speaker Change: Davidson.
Speaker Change: Investors meeting with analysts.
Speaker Change: And getting the story out there so that the stock would trade.
Speaker Change: Like to continue to sell shares through the ATM.
Speaker Change: Our real range of.
Speaker Change: Our debt.
Speaker Change: Great.
Speaker Change: One zero.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Not really.
Speaker Change: Yes.
Speaker Change: Got it.
Speaker Change: Oh.
Speaker Change: Sure.
Speaker Change: Yeah.
Hopefully.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: We're beating everybody.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: But for us.
Speaker Change: On our growth.
Unnamed Speaker: And our dividend yield is right around 5%. and we're happy with that as well.
Speaker Change: And our dividend yield is right right right around 5%.
Speaker Change: And.
Speaker Change: We're happy with that as well.
Speaker Change: I know those people that they are having a hard time hearing us we're doing the best we can recur so.
Unnamed Speaker: I know those people out there that are having a hard time hearing us, we're doing the best we can over here, so hopefully whatever I miss, you'll ask in the question and we'll be able to answer it. You know, we're proud of the fact that we're, you know, really young, pure play. Field Nursing Health Care Rehabilitator.
Speaker Change: Hopefully whatever I missed your last question and then we'll be able to answer it.
Speaker Change: Sure.
Speaker Change: We're proud of the fact that we are.
Speaker Change: Really around Norway.
Speaker Change: <unk> <unk> out there.
Speaker Change: Matt.
Speaker Change: 81% of our port.
Speaker Change: L J.
Speaker Change: We generally do not.
Unnamed Speaker: So I'm going to give you generally non-linear fields for... No, it's been improving since Corona ended. We see PCR10 is doing well, and hopefully they'll continue to thrive. something like that. And that should be another, you know, 10% clip or 12% clip. And that together with our 5% dividend yields provides. provides a good double-digit return for our investors. And we expect that we should be able to continue to do that. Our business is so solid and stable that really, if we just stopped doing what we're doing, we'd be able to just dividend out twice as much as we have, as we're doing now.
Speaker Change: <unk>.
Speaker Change: Or.
Speaker Change: Okay.
Speaker Change: Our portfolio.
Speaker Change: And.
Speaker Change: Can you do.
Speaker Change: As of July one.
Speaker Change: This plan there all over.
Speaker Change:
Speaker Change: Yeah.
Speaker Change: Awesome.
Speaker Change: Yes.
Speaker Change: That's pretty good number.
Speaker Change: It's going through.
Speaker Change: Right.
Speaker Change:
Speaker Change: Doing well.
Speaker Change: Okay.
Speaker Change: Right.
Speaker Change: Sure.
Our.
Speaker Change: Share growth.
Speaker Change: Five years.
Speaker Change: However.
Speaker Change: Sure.
Speaker Change: And to grow.
Speaker Change: For us.
Speaker Change: Yes.
Yes.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Yes.
Speaker Change: Our shares.
Speaker Change: Hi.
Speaker Change: She is here.
Speaker Change: All of us.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Got it.
Speaker Change: Something like that and that should be another 10% clip or 12% clip.
Speaker Change: That together with our.
Speaker Change: 5% dividend yield provides provided by a double digit return for our investors.
Speaker Change: Second we shall continue to do that our business is so solid and stable that really if we just stopped doing what we're doing we'd be able to just David platelet levels, we have.
Speaker Change: Now.
Unnamed Speaker: And, and, and, you know, we should be able to continue to collect all of our or the way you want to grow, but really on our terms, we've told the marketplace. We told the marketplace exactly how to buy and we remain committed to buying exactly that way. And so, and that's what we're doing.
Speaker Change: And.
Speaker Change: We feel this.
Speaker Change: The clinical bar rates.
Speaker Change: Not.
Speaker Change: It really is.
Of course, our objective is to keep growing as long as we can grow the way you want to grow.
Speaker Change: We've told the marketplace.
Speaker Change: We told the marketplace exactly how we buy and we remain committed to buying exactly that way.
Speaker Change: And so and that's ongoing.
Speaker Change: And to do that.
Speaker Change: Yes sure.
Speaker Change: <unk>.
Unnamed Speaker: Thank you Dan. We do expect to clean up some of our debt by bringing in new employees.
Speaker Change: We're currently getting.
Speaker Change: The decline.
Speaker Change: I just wanted to clarify.
Speaker Change: Louis.
Speaker Change: Some of our debt.
Speaker Change: Yeah.
Unnamed Speaker: I hope you're doing very well. and pay down debt. That should be good for all of us in general. We still look to HUD as our exit on the debt side of things, though the previous prior administration has become very difficult to deal with. We'll see where that goes.
Speaker Change: Well okay.
Speaker Change: Celsius.
Speaker Change: Not yet.
Speaker Change: Can be good for all of us.
Speaker Change: <unk>.
Speaker Change: So all of that now.
Speaker Change: On the debt side of things.
Speaker Change: Hey.
Speaker Change: Please.
Speaker Change: Phil.
We'll see we'll see where that where that where that lands.
Unnamed Speaker: This is really what I'm proud of. This project here shows you that we've diversified our portfolio by state and by operator, where nobody is hired and employed. portfolio.
Speaker Change: This is really what I call. This puzzle here shows you that we have diversified our portfolio.
Speaker Change: Operator, we are now.
Speaker Change: <unk> higher than the 28% of our portfolio and likelihood needlessly.
Unnamed Speaker: And I think it's neat. that we continue to grow.
Speaker Change: Well.
Unnamed Speaker: And this is for me, this is really good because when we started a year ago, it was one operator in one state, and then it became one operator in two states, and then So the process I like to relate it to is I'm sorry, but we're going to continue.
Speaker Change: And as for Natus.
Speaker Change: On the desire to visit with one of our loans and aggregating these.
Speaker Change: These days.
Speaker Change: And as you saw in adding more and more workloads.
Speaker Change: Related party leases or.
Speaker Change: It was neither.
Speaker Change: Good evening.
Speaker Change: Awesome likely related R&D sorry.
Speaker Change: And we're going to continue to diminish.
Speaker Change: Many of those.
Speaker Change: Those down.
Speaker Change: Okay.
Unnamed Speaker: at the Everyman Foundation. This is what our map looks like, you know, still Missouri and Tennessee, Mississippi, Alabama, Georgia, Ohio. So we have what to do in the Midwest, but that's really where we're at. box we would buy. The reality is we're in the West.
Speaker Change: Yes.
Speaker Change: In other words the teams immediately outside.
Speaker Change: Not related to two of our portfolio that is the one that looks like.
Speaker Change: There's still time.
Speaker Change: Missouri.
Speaker Change: And.
Speaker Change: Dan.
Speaker Change: Sure.
Speaker Change: So what we're doing.
Speaker Change: The last.
Speaker Change: We are now.
Speaker Change: Found in those facilities.
Speaker Change: No.
Speaker Change: We provide.
Speaker Change: Royalty revenue for us.
Speaker Change: In the us.
Speaker Change: For an example.
Speaker Change: Yes. It is.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: <unk>.
Unnamed Speaker: After that, we'll open the floor for questions.
Speaker Change: Yes.
Speaker Change: And the floor for questions.
Unnamed Speaker: Certainly.
Speaker Change: Certainly.
Speaker Change: Ladies and gentlemen, the floor is now open for questions. If you would like to ask a question at this time. Please press star one on your telephone keypad.
Tom: Ladies and gentlemen, the floor is now open for questions. If you would like to ask a question at this time, please press star 1 on your telephone keypad. We do ask if listening on speaker phone this morning that you pick up your handset while asking your question to provide optimal sound quality. Once again, please press star one on your telephone keypad at this time. If you wish to join the queue to ask the question, please hold a moment while we pull for questions.
Speaker Change: We do ask if listing on speaker phone. This morning that you pick up your handset while asking your question to provide optimal sound quality. Once again. Please press star one on your telephone keypad at this time, if you wish to join the queue to ask a question. Please hold a moment, while we poll for questions.
Speaker Change: And the first question. This morning is coming from Gaurav Mehta from Alliance Global Partners Gaurav. Your line is live. Please go ahead.
Gaurav Mehta: And the first question this morning is coming from Gaurav Mehta from Alliance Global Partners. Gaurav, your line is live. Please go ahead. Thank you. Good morning.
Gaurav Mehta: Thank you good morning.
Unnamed Speaker: I wanted to ask, I wanted to ask you more details on this transaction market. want to get some some color on what you were seeing as far as deal flow and pricing. Okay, well, I'll let Jeff answer that.
Gaurav Mehta: Good morning, I wanted to ask I wanted to ask you more details on the transaction market.
Gaurav Mehta: I wanted to get some color on what youre seeing as far as deal flow and pricing.
Speaker Change: Okay, well I'll, let Jeff answer that but I would just tell you pricing wise.
Unnamed Speaker: But I would just tell you pricing wise, we, you know, buy things exactly the same way.
Speaker Change: We buy things exactly the same way so it doesn't fit our box.
Jeff Beitner: So if it doesn't fit our box, we don't, we don't, we don't buy it, we haven't bended, we haven't bent on that or bended, that's the right English word, on our, on our philosophy and our execution strategy. But I'll let, I'll let Jeff answer what the pipeline looks like. I mean, consistently from all corners of the country, but I mean, as much said.
Speaker Change: We don't we don't we don't buy it we haven't ended we havent bent on debt amended fluctuating off work for an hour on our philosophy and our execution execution strategy at all.
Speaker Change: I'll, let Jeff answer what the pipeline looks like.
Speaker Change: Got it.
Speaker Change: No.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Right.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: I mean deals are coming in.
Speaker Change: I mean consistently from all corners of the country, but I mean as Mike said we're.
Jeff Beitner: We're only going to be growing in a new state if it makes sense and we've There's a sizable approach. Our portfolio pipeline right now is about $350 million. And a big source of our deals has been Richland Air Passageway, Hunter Road, and we'll get to Hunter soon.
Speaker Change: We're only going to be growing in a new state if it makes sense or meats. I mean, there is a sizeable approach or a federal portfolio.
Speaker Change: Thank you for their surgery in Missouri and Kansas.
Speaker Change: I think those days are gone.
Byron: Hi, Byron.
Speaker Change: Great.
Speaker Change: Please turn to the outlook.
Speaker Change: Sure.
Speaker Change: Thanks, Andrew.
Speaker Change: Sure.
Jeff Beitner: The conference is coming up this week in San Diego. F-R-E-I-D-C-E-A-N-G-O-R-E-D-O-W-I-N-C-H-E-A-N-G-O-R-E-D-O-W-I-N-C-H-E-A-N-G-O-R-E-D Yeah, I would I would say that I would say that, you know, as we get bigger and bigger, hopefully deal size will continue to grow. And we've we've now two years in a row closed over 100 110 $125 million a year. We expect this year, hopefully, Marketplace wants me to sound like I'm certain that things are going to happen, but I don't have a crystal ball. So I'm telling you like how I feel, but I expect that we should be able to close 150 million dollars this year and hopefully more.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: As we move forward.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yeah, I would I would say that I would say that you know.
Speaker Change: As we get bigger and bigger hopefully deal size will continue to grow.
Speaker Change: We've now two years in a row closed over 100.
Speaker Change: 100.
Speaker Change: $10 million to $125 million a year.
Speaker Change: We expect this year hopefully.
Speaker Change:
Speaker Change: The marketplace wants me to sound like I'm certain that things are going to happen, but I don't have a crystal ball. So I'm, telling you do you like how I feel but I expect that we should be able to close $150 million. This year and I'll play Mark, but we already have I think.
Jeff Beitner: But we already have, I think, most likely lined up ready probably close to 80 $90 million for ready. It's only the, you know, beginning of March so hopefully this year will be a banner year as far as growth and again, it's controlled growth because it's only it has to fit our box, doing business the way we do business.
Speaker Change: Most likely wind up rating, probably close to $80 million to $90 million for ready and it is only the beginning of March. So hopefully this year will be a banner year as far as our growth and again, it's control growth because it's only it has to fit our box.
Speaker Change: Doing business the way, we do business.
Speaker Change: Okay, great as a follow up.
Unnamed Speaker: Okay, great.
Unnamed Speaker: As a follow up, you know, as you look to grow your company 25, how should we think about your leverage expectations? So again, our our our mandate has been between 45 and 55. That's equity. And that's market cap at this point. And I would expect, I would expect to be towards the low end of that range. I mean, that was one of the things I'm proud of from 2018. We're all doing you know We have an open market for selling equity. We have an open debt market, obviously, in Israel for us. And we have banks in America that are willing to lend to us.
Look to grow your company 25, how should we think about your leverage expectations.
Speaker Change: So again, our our our mandate has been between $45 55.
Speaker Change: Debt to equity.
Speaker Change: And our debt to market cap at this point.
Speaker Change: And I would expect I would expect to be towards the low end of that range.
Speaker Change: The determinant I mean that was one of the things I'm proud of from 'twenty.
Speaker Change: One form of debt that we were able.
Speaker Change: Yes.
Speaker Change: We have an open market for selling equity we haven't open debt market, obviously in Israel for us and we have banks in America that are willing to lend to us. So there's a lot of different choices right. Every every every cash has a price to it.
Unnamed Speaker: So there's a lot of different choices. Every cash has a price to it. Depending on where things are, we're looking to take out the best option for us. Most of the things that we do, it's flexible. So even if I close on where today it makes sense to take on debt, tomorrow equity goes up, I could take on equity and pay down debt, or vice versa. And so I have all the confidence today as a person, as a human being, and as a group, you know, I have all the confidence in our ability, you know, to bring in the cash needed for a deal to get closed.
Depending on where things are.
Speaker Change: Yes.
Speaker Change: We're we're looking to take out the best option for US most of the things that we do.
Speaker Change: Its flexible so even if I close on where today it makes sense to take on debt right Tomorrow equity goes up I can take on equity and pay down debt or vice versa.
Speaker Change: Hum.
Speaker Change: So I have all the confidence today is first as a human being and as a group.
Speaker Change: I I I have I have all the confidence in our ability.
Speaker Change: Two bringing the cash needed for a deal to get closed.
Speaker Change: And again, we want to be probably south of 50%.
Unnamed Speaker: probably south of that. And so, but you know, again, we have all the options available to us.
Speaker Change: Of that.
Speaker Change: And so.
Speaker Change: But again, we have all the options available to us.
Speaker Change: Okay, Yeah, Yeah, I don't know if I missed in the prepared remarks, but did you guys provide a forecast for 225, yeah for sure.
Unnamed Speaker: Okay, and lastly, I don't know if I missed in the prepared remarks, but did you guys provide a forecast for 2025 EFF over share? I, I think, I mean, we don't have exact. I think our range. they will probably I didn't want to be too aggressive to to to to stay on you. I would say, you know, for, you know, one twenty one twenty as our expected as a focus there for for the year. And I expect to beat that.
Speaker Change: I think I mean, we don't have exact I think I think our range would be somewhere.
Speaker Change: You heard about a 111.
Speaker Change:
Speaker Change: I will probably want to be too aggressive.
Speaker Change: I would say.
Speaker Change: No 120.
Speaker Change: Mm 120 as are expected.
Speaker Change: If appropriate share for the year.
Speaker Change: I expect it to be that so I'm really I'm really I'm really undercutting myself, because I want to again.
Unnamed Speaker: So I'm really, I'm really, I'm really undercutting myself because I want to, again, I think this is the last time I'm looking for adulation. So I want to beat what I tell you is that I look good. Silly one.
Speaker Change: I'm looking to add solutions I want to build it out to be what I'd tell you is that I look the reality is it's probably one.
Speaker Change: <unk>, maybe a little bit north of that.
Speaker Change: Okay. Thank you that's all I had.
Unnamed Speaker: Okay, thank you. That's all I have. You're welcome.
Bob: Youre welcome. Thank you Bob.
Unnamed Speaker: Thank you, Gaurav. Thank you.
Speaker Change: Thank you. Your next question is coming from Rob Stevenson from Janney Rob. Your line is live. Please go ahead.
Rob Stevenson: Your next question is coming from Rob Stevenson from Jenny. Rob, your line is live. Please go ahead. Good morning, guys. The sound keeps cutting in and out. Did you say a buck 20 of AFFO for one for 2025? Was that what the number was that you guys gave? Yeah, yeah, I think that's a number that I could certainly hit.
Rob Stevenson: Good morning, guys.
Speaker Change: It keeps cutting in and out did you say a buck 20 of <unk> for one for 2025 was that what the number was that you guys gave.
Speaker Change: Yeah, Yeah, I think thats, a number that I can certainly head count.
Rob Stevenson: I expect to probably beat it. Okay.
Speaker Change: I expect that probably beat it.
Rob Stevenson: And then sorry, if you guys covered this, because the sound was fading in and out through most of the call. But I think I heard you say that most of your 25 lease expirations had renewed already. Can you talk about where you are with the ones that haven't yet renewed or won't? Yeah, yeah, we have we have two leases left for 2025. One of them renews either August, August or September 1. And one of them, one of them renews in December, the one that renews in December is there's a five year, there's two five years remaining on that deal.
Speaker Change: And then sorry, if you guys covered this because the sound was fading in and out through most of the call, but I think I heard you say that most of your 25 lease explorations had renewed already can you talk about where you are with the ones that haven't yet renewed or Walt.
Speaker Change: Yeah, Yeah, we have we have two leases left for 2025.
Speaker Change: The renewed one of them or news.
Speaker Change: Either August August or September one and then one of them one of them or news in December one that renews in December there's a five year theres two five years remaining on that deal and the tenant has already said that they're going to renew that lease.
Rob Stevenson: And the tenant has already said that they're gonna renew that. And the second one. doesn't renew. It's the end of the lease that's mature. And the tenant already said that they do not plan on staying in the property. We're actively pursuing a new tenant for that one asset. But other than that, this is one asset out of 130 assets. It's one of the standalones. Most likely, it will end up not being in a master lease because I think it's going to be a new operator. Reit The budget neutral, you know, give or take, you know.
Speaker Change: So that's good and the second one.
Speaker Change: It doesn't renew it at the end of the lease it's mature and the tenant has already said that they do not plan on staying in the property.
Speaker Change: So we're actively pursuing.
Speaker Change: A new tenant for that one for that one asset but other than that these are these are such as one asset at a 130 assets. It's one of the stand alone.
Speaker Change: Most likely it will end up.
Speaker Change: Most likely it will end up not being in a master lease because I don't think it's I think it's going to be a new operator is not going to be it's not going to be somebody that we already leased two.
Speaker Change: And so and so it will stay a standalone it will probably be there'll be a new 10 year with two five years I would expect that we should be able to.
Speaker Change: Budget neutral.
Speaker Change: Give or take.
Speaker Change: Small money, one way or the other.
Rob Stevenson: small money one way or the other. And again, and then we'll lock them in for 10 year or two, five years. We'll take our normal, our normal, routine, which, you know, six months to security deposit full guarantee the lease and. that's on for, you know, August, September, and we'll update you folks, but only one lease.
Speaker Change: <unk> and.
Speaker Change: And again and then we'll lock them in for 10 year with two five years, we'll take the normal our normal routine, which six months the security deposit full guarantee of the lease.
Speaker Change: So god willing we'll be able to get that done for August.
Speaker Change: August September and we'll update you folks, but it's only one lease it's relatively immaterial, but it's.
Rob Stevenson: It's relatively immaterial, but it's We'll update you, I guess, next quarter, Learning School. OK.
Speaker Change: We will update you I guess next quarter earnings call.
Speaker Change: Okay.
Rob Stevenson: You already know what And then on page 24 in the slide deck, you guys have the operator-payer mix. The Medicaid percentage went up noticeably quarter over quarter.
Speaker Change: Yeah.
Speaker Change: And then on page 24 in the slide deck, you guys have the operator payer mix.
Speaker Change: The Medicaid percentage went up noticeably quarter over quarter is that just the acquisitions or is something else driving that and is sort of 70, 576%, where there should be going forward in your mind.
Rob Stevenson: Is that just the acquisitions or is something else driving that and is sort of 75-76% where this should be going forward in your mind? You know, we don't audit, our tenants don't have audited financials, and we don't audit their what they submit to us. We gather it and pass it along. And we don't really, we don't really, for that specific, for that specific metric, we're not really auditing that, you know, it's not, it's not as important to us.
Speaker Change: We don't audit our our tenants don't have audited financials, and we don't what are their what they submit to us we gather it and pass it along.
Speaker Change: And we don't really we don't really for that specific.
Speaker Change: So that specific.
Speaker Change: Metric, we're not really doing that.
Speaker Change: It's not it's not as important to us.
Rob Stevenson: I can, I can try to go and, you know, dig into the numbers in the next couple days and get back to you, Rob. I don't, I don't, I don't know if it's, I don't know if it's just a reclass of, you know, before hospice or something that now they're coding as Medicaid, you know. So I'd have to get back to you because it's not something that we spend too much time in our asset management, really. We spread the numbers and we put it into format and we present it, but it's not something that we really know.
Speaker Change: I can try to go in.
Speaker Change: Dig into the numbers in the next couple of days and get back to you Rob.
Speaker Change: I don't I don't.
Speaker Change: I don't know if it's I don't know if it's just a re class.
Speaker Change: Before our hospice or something that now they are quoting as Medicaid.
Speaker Change: No.
Speaker Change: Well I'd have to get back to you because it's not something that we spent too much time in our asset management really.
Speaker Change: Read the numbers and we put it into format or he presented but it's not something that we really know and I don't want to <unk>. That's not my style is you know.
Rob Stevenson: And I don't want to BS you. That's not my style, as you know. Um, and then, um...
Speaker Change: Okay.
Speaker Change: And then.
Speaker Change: In terms of the of the shares and all outstanding.
Rob Stevenson: In terms of the shares and all outstanding, what were the diluted shares and units outstanding for the fourth quarter as well as for the full year? The release only had the share count, but not the units. So you want to answer that? 12.1 Okay, and how significant was the ATM issuance in the fourth quarter? On the fourth quarter, we didn't, we only used the API.
Speaker Change: What were the diluted shares and units outstanding for the fourth quarter.
Speaker Change: Well as for the full year the the release only had the the share count, but not the units.
Speaker Change: Oh, you want answer that.
Speaker Change: Our diluted share.
Speaker Change: Youre right were roughly top line $12 1 million shares.
Speaker Change: Our per unit.
Speaker Change: Ordinary shares.
Speaker Change: Sure.
Speaker Change: Okay, and how significant was the ATM issuance in the fourth quarter.
Speaker Change: The fourth quarter.
Speaker Change: Yes.
Speaker Change: In the October issue.
Speaker Change: 71000 shares.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Okay guys. Thanks.
Rob Stevenson: Okay, guys. Thanks. Appreciate the time this morning. You're welcome. Pleasure. Thank you.
Speaker Change: I appreciate the time this morning, guys Youre welcome.
Speaker Change: Pleasure. Thank you.
Speaker Change: Thank you and as a reminder, should you wish to join the queue to ask a question at this time. Please press star one on your telephone keypad.
Tom: And as a reminder, should you wish to join queue to ask a question at this time, please press star one on your telephone keypad.
Rich Anderson: And your next question is coming from Rich Anderson from Wedbush Securities. Rich, your line is live. Please go ahead. Thank you. Can you just repeat those diluted share numbers you faded out as you were getting to the OP units? I heard 12.1 million shares and then 43 point something. 3.4 million OPU Okay, OP units. And so that's for a total of 55.5. Is that right? Okay. Okay, thank you. Yeah, that's all 31. Okay, thank you.
Speaker Change: And your next question is coming from Rich Anderson from Wedbush Securities Rich. Your line is live. Please go ahead. Thank you can you just repeat those diluted share numbers you faded out as you were getting to the.
Speaker Change: The O P units I heard $12 1 million shares and then 43 point something.
Speaker Change: If you could already $3 4 million op units, Okay, Oh P units and so that for a total of $55 five alright, okay. Yes, okay. Thank you that's helpful.
Speaker Change: Okay. Thank you.
Rich Anderson: Oh, that was, that was as of... Okay, gotcha.
Speaker Change: That was that was as of Okay got you.
Rich Anderson: Um we think about financing future activity do you give any thought uh... to dispositions playing uh... any kind of role at all i'm looking at your map here and you have some some assets that are you know for a field from your your core cluster that something you're thinking about or are those sort of planet there for a potential to grow in places like you know south texas or you know new mexico area or something like that Well, well, it's an interesting question. So, you know, the thing the thing about our map is what we own.
Speaker Change: When you think about financing future activity.
Speaker Change: Do you give any thought.
Speaker Change: Two dispositions playing.
Speaker Change: Any kind of roll it all I'm looking at your map here you know you have some some asked et cetera, but you know far afield from your core cluster is that something you're thinking about or are those sort of planet there for a potential to grow in places like you know.
South, Texas, or new Mexico area or something like that.
Speaker Change: Well well see.
Speaker Change: It's an interesting question.
Speaker Change: The thing about our map is what we own.
Rich Anderson: It's not what our tenants operate. And so some of our tenants fill in the map pretty good with stuff that they're leasing from other other landlords. So you don't see their whole portfolio and how they're operating. Like Missouri as an example. Missouri, our tenant in Missouri has 35 facilities. We're only leasing 8 out of the 35. So then that fills in pretty good for him. Far as we go, our growth, our growth currently is actually the deals that that The deals that we have that are hot for, you know, the next quarter or so are actually in Texas, Oklahoma, and in Missouri.
Speaker Change: Our tenants operate and so some of our tenants filling in the map pretty good with stuff that they're leasing from other other methods.
Speaker Change: So you don't see their whole portfolio and how they're operating.
Speaker Change: Missouri is an example, Missouri our tenant in Missouri is 35 facilities were only leasing of eight out of the 35.
Speaker Change: Yes.
Speaker Change: Pretty good brand.
Speaker Change: As far as we go.
Speaker Change: Our growth our growth currently is actually the deals.
Speaker Change:
Speaker Change: The deals that we have that are hot for for the next quarter or so or actually in Texas, Oklahoma.
Speaker Change: And.
Speaker Change: And in Missouri.
Rich Anderson: So that will help fill in the map. um but yeah Yeah, I'm not catching that last part, but that's that's okay. I guess a good point.
Speaker Change: So that will help fill in fill and fill in the map.
Speaker Change: But yes I think.
Speaker Change: Yes.
Speaker Change: Okay.
Yeah.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Right.
Speaker Change: Yeah, I'm not catching that last part, but that's okay, because that was a good point Moshe.
Rich Anderson: Why should the Your tenants themselves kind of fill in the gaps and then my last question Uh we got a few on on medicaid in the government and you know budget and all that sort of stuff you have to be keeping up at night or you know where where do you where you land on all the politics behind uh... skilled nursing these days Well, you know, you know, my background was as an operator. I mean, I haven't been involved with operations in probably 10 years or 11 years, but I'm still really in tune with what's going on.
Speaker Change: Hey, your tenants themselves kind of filling the gaps and then my last question.
Speaker Change:
Speaker Change: We got a few one on Medicaid and the government and you know budget and all that sort of stuff do you have does it keeping you up at night or you know, where where do you where do you land on all the politics behind a skilled nursing these days.
Speaker Change: Well you know my background was as an operator.
Speaker Change: I haven't been involved with operations in probably 10 years or 11 years, but im still really.
Speaker Change: <unk> with what's going on in Florida.
Rich Anderson: So in a bunch of groups, and I get a lot of data. And, you know, I most of most of, I mean, at least in the last few days, I think the Trump just announced that they're going to be now eliminating or working on eliminating all the civil money penalties that are, you know, because it doesn't really police the facilities just by charging them money, you know, that doesn't make them somehow improve their operation. Um, that being said, you know, most most of the conversation in the marketplace that I The conversation that people still are most concerned about is the reimbursement.
Speaker Change: Groups, and then I've got a lot of data.
Speaker Change: And you know.
Speaker Change: Most of most of it.
Speaker Change: At least the last few days.
Speaker Change: I think I think I think the Trump just announced that they're going to be now eliminating or working on eliminating all of the civil money penalties that are that are.
Speaker Change: Doesn't really police the facilities just by charge of that money.
Speaker Change: Let them somehow improve their operations.
Speaker Change: That being said most most of the conversation in the marketplace that I hereof.
Speaker Change: The conversation that people saw most concerned about is the reimbursement is not on the.
Rich Anderson: It's not on the, it's the net, you know, that flies around that causes the biggest trouble is the regulations and you have to be regulated. It's that kind of business that, you know, you need someone to be policing, you know, making sure people are taking care of this, our most precious commodity is our, you know, ancestry, our parents, our grandparents. That being said, I think the biggest worry out there is still the funding, not really the regulation. the regulation is is a uh a net flying around um and I think most people are optimistic that um that on the downside protection, most people are not expecting any negative or reimbursement to occur.
Speaker Change: The net that's wise around that causes the biggest trouble is the regulation.
Speaker Change: You have to be regulated it's that kind of a business that seemed to be policing.
Speaker Change: Sure. If you will take care of this is our most precious.
Commodity is R. R.
Speaker Change: The ancestry or parents or grandparents.
Speaker Change: That being said.
Speaker Change: I think I think the biggest worry out there is still the funding not not not really the regulators, even though the regulation is a.
Speaker Change: That flying around.
Speaker Change: And I think most people are optimistic that.
Speaker Change: That on the downside.
Speaker Change: Protection.
Speaker Change: Most people are not expecting any.
Speaker Change: For reimbursement to occur.
Speaker Change: And hopeful on the upside that.
Rich Anderson: side that the states will find money in their budgets to be able to keep increasing funding to make sure that the operators have the wherewithal they need to be able to keep operating. That's my thought. I'm not too worried about it, but my personality is anyway that of a warrior, but it's definitely, it's a little uneasy, but it's not, it's not... totally uh... you know on uh...
Speaker Change: Sure.
Speaker Change: <unk>.
Speaker Change: Sure.
Speaker Change: The state's we'll find the money in their budgets to be able to to keep increasing funding to make sure that the operators have the wherewithal they need to be able to keep operating.
Speaker Change: Profitability.
Speaker Change: But I don't I'm, not I'm, not I'm not too worried about it but my personality is anyway.
Speaker Change: None of the warrior, but.
Speaker Change: It's definitely it's a little uneasy, but it's not it's not.
Speaker Change: I'm totally.
Speaker Change:
Rich Anderson: you know on the up not on the down appreciate the honesty thanks guys Always, always rich, always. Thank you.
Speaker Change: On the up and down.
Speaker Change: Okay.
Speaker Change: I appreciate the honesty. Thanks, thanks, guys.
Speaker Change: As always rich.
Speaker Change: [laughter].
Speaker Change: Yeah.
Barry Oxford: Your next question is coming from Barry Oxford from Colliers. Barry, your line is live. Please go ahead. Great, thanks guys. Getting back to the tenets, the one that is moving out, it seems like you guys got a pretty good beat on releasing that. Are there any other...
Speaker Change: Your next question is coming from Barry, Oxford from Colliers Barry Your line is live. Please go ahead.
Barry: Great. Thanks, guys getting back to the tenants are the one that is moving out.
Barry: It seems like you guys got a pretty good bead on.
Barry: Re leasing that are there any other tenants.
Barry Oxford: and it's the you looking out into twenty six that you're concerned about i know you collected a hundred percent of rents Um, you know, overall, overall, not really, um, our, our The weak state, from a reimbursement standpoint, has a lot to do with... union strength and labor and the whole marketplace is really In our portfolio trouble began really post covid because of a lot of the rules they didn't they didn't they didn't let us to only in the last 66 months, and most of us have thought that COVID has been gone already two years. So with that, there's been a lot of attention paid to this operation.
Speaker Change: Ken it's the looking out into 'twenty six that you're concerned about and I know you've collected 100% of rents this quarter.
Barry: Okay.
Barry: Overall overall not really our hour.
Barry: The weak state for from a reimbursement standpoint.
Barry: Sure.
Barry: Union strength than labor and the whole marketplace is really the Chicago land market.
Barry: Portfolio.
Barry: And so.
Barry: That will began.
Barry: Really post COVID-19 because of one of the rules.
Speaker Change: David It is set up on a lot of withholding rules only in the last six months.
Speaker Change: So Delta Cove has begun already two years, so there so with that there.
Speaker Change: There's been a lot of attention.
Speaker Change: <unk>.
Barry Oxford: and they've caused a lot of pain amongst people as far as operating and profitably.
Speaker Change: And they have caused a lot of pain amongst people as far as you know.
Speaker Change: As far as operating.
Speaker Change: Profitably now our our model has is when they look for tenants as we were not.
Barry Oxford: Now, our model has us, when we look for tenants, is we're not usually just leasing to people that don't have deep pockets. So most of our people have made money and ride the wave. And when the market is down, marketing, in this case, sales and reimbursement, Reimbursement's not down, it's expensive they're up, is that they have the wherewithal and deep pockets to be able to withstand it and then ride the wave the opposite direction, which hopefully happens sooner than later. So with that being said, you know, I'm not really too worried. I'm worried about that, you know, that region, which is at this point six, seven, maybe eight homes.
Speaker Change: People that don't have deep pockets. So most of our people have made money and ride the wave when the market is down.
Speaker Change: Okay.
Speaker Change: We entered the year.
Speaker Change:
Speaker Change: It really reimbursement shutdowns extensive thereof is that is that they have.
Speaker Change: The deal wherewithal deep pockets to be able to withstand it and then and then ride the wave the opposite direction, which hopefully happens sooner than later.
Speaker Change: So with that being said im not really too worried I'm more worried about that that region, which is at this point.
Speaker Change: Homes and out of those eight homes.
Barry Oxford: And out of those eight homes, you know, three of them are really profitable. A couple of them are right in the middle, and then you got a couple of homes that are struggling. And again, you know, I would expect that we'll have a. We'll have a change in one asset, we'll have change maybe in a second asset, even though we're collecting 100% rent, we'll change out operators to somebody else that wants to make a go of it. And everything should be right. way sooner than the end of the year. Okay, perfect.
Speaker Change: Three of them are really profitable.
Speaker Change: Couple of them were right in the Middle and then you've got a couple of homes that are struggling and again you know I I would expect that well have a change we will have a change in one asset will have changed maybe in a second asset even though we're collecting 100% rent we'll change out operators to somebody else.
Speaker Change: That wants to make a go of it.
Speaker Change: And and everything should be right.
Speaker Change: Wait sooner.
Speaker Change: But at the end of the year.
Speaker Change: Okay. Okay perfect and then last question for me given the growth that you have in the portfolio for 2025, and maybe doing a 150, maybe even more acquisitions, how should we think about the G&A as we're kind of modeling that out for 25.
Barry Oxford: And then last question for me, given the growth that you have in the portfolio for 2025 and maybe doing 150, maybe even more acquisitions, how should we think about the G&A as we're kind of modeling that out for 2025? So, for GNA.
Speaker Change: So for G&A.
Speaker Change: This is my last and last year the last quarter's comment at this point, our G&A is exactly.
Barry Oxford: This is my last year, the last quarter's comment. At this point our GNA is exactly what you see for fourth quarter GNA is basically what our normal run rate should be going forward by quarter. The only thing that's still out there is my pay, where there's been a bunch of discussion amongst the board members and the compensation committee about compensating me more in line with the market. I'm not pushing it. I honestly don't care. I'm a large shareholder, and it's a labor of love as much as it is a livelihood.
Speaker Change: What you see for fourth quarter G&A is.
Speaker Change: Basically what our normal run rate should be.
Speaker Change: Going forward by quarter, the only the only thing that's still out there is my pay where there's been a bunch of discussion amongst the board members and the compensation Committee about compensating the more in line with the market I'm not pushing it I honestly don't care of a large shareholder.
Speaker Change: There's a labor of love as much as it is.
Speaker Change: Our livelihood.
Speaker Change: And so I would say to you that if you wanted to model for you know.
Barry Oxford: And so I would say to you that if you want a model for – I'm going to call it worst case, but that's not really worst case, assuming that you have me sign some kind of employment agreement and you want to model it out, you'd be adding to the G&A, you know, maybe a million, $2 million a year. It's not a huge, huge number. It's a bigger number than what we've been running. I think we'd still be running leaner than all of our competitors, all of our peers. But that's the only thing else. There's no GNA, there's no other expected cost increases anywhere in our, anywhere in our, you know, in our cost profile of the GNA expense.
Speaker Change: On the call worst case, but that's not really worst case, assuming that you had signed some kind of employment agreement.
Speaker Change: Do you want to model it out you would be adding to the G&A you know, maybe a $1 $2 billion a year.
Speaker Change: So huge huge leverage bigger number than what we've been running and I think I would still be running leaner than all my all of our competitors all of our peers.
Speaker Change: But that's the only thing else Theres no G&A theres no other expected cost increases anywhere in our anywhere in our.
Speaker Change: Our cost profile of the G&A expense.
Speaker Change: Perfect. Thanks, guys I appreciate it.
Barry Oxford: Perfect. Thanks, guys. Appreciate it. You're welcome. Thank you, Barry.
Speaker Change: Youre welcome. Thank you Barry.
Speaker Change: Thank you. Your next question is coming from Mark Smith from Lake Street Mark. Your line is live. Please go ahead.
Mark Smith: Thank you. Your next question is coming from Mark Smith from Lake Street. Mark, your line is live. Please go ahead.
Hi, guys first question for me was just any update or thoughts on on the integration of the newly acquired properties.
Mark Smith: Hi guys, first question for me was just any update or thoughts on the integration of the newly acquired properties, you know, and You guys were acquiring at a little more rapid pace here recently. Yeah, no, it's it's seamless. I mean, we, we already had been there beforehand. So from an asset management side, we already had our baseline and other properties. We already know the properties, and the first time around before we ever buy the asset, I mean, we have a library full of pictures of every nook and cranny of every building that we pull out.
Speaker Change: You guys were acquired in that a little more rapid pace here recently.
Speaker Change: Yeah no.
Speaker Change: It's seamless.
Speaker Change: We already had been there beforehand, so from an asset management side, we would have that baseline of those properties look.
Speaker Change: We already know the properties.
Speaker Change: The first turnaround before we ever buy the asset I mean, we have we have a library full of pictures every nook and cranny of every building that we bought.
Speaker Change: With that our conversation and relationships.
Mark Smith: that our conversation and relationships with the operator has gone off great, both Willie in Kansas and Rick and Nick in Missouri, I mean, their model and good guys and we're spending a lot of time together outside of outside of I mean that's part of our routine is we make friends with people we do business with um and so we so yeah so it's relatively seamless the first month you know just a little bit of coordination of the wire instructions of the ACH but now everything's set up to get our rent on the first of the month or second of the month like every other tenant um and and absorbed all the capex schedules and really it's it's it's really not uh it's it's it's seamless there was no there was no hiccup you know at all and we don't expect there to be a hiccup at all um i Because of the more now I have to go Spend a little bit more time in St.
Speaker Change: With.
Speaker Change: The operator.
Has gone off grade.
Speaker Change: Both Willie and Kansas, and Eyal, and Rick and Nick and Missouri.
Speaker Change: Their model model.
Speaker Change: Good guys and we're spending a lot of time together outside of outside of it I mean, thats part of our routine as we make friends with people, we do business with.
Speaker Change: And so we so yes, so it's relatively seamless the first month.
Speaker Change: Just a little bit of a coordination of the wire instructions of the H, but now everything is set up to get our rent on the first of the month or secondly, a month like every other tenant.
Speaker Change: And.
Speaker Change: And we absorbed all the capex schedules and really it's it's really not.
It seemed like there was no there was no hiccups.
Speaker Change: At all.
Speaker Change: We don't expect there to be a hiccup at all.
Speaker Change: It actually causes a little bit more.
Speaker Change: I have to go and.
Spend a little bit more time, St. Louis, Missouri to cultivate cultivate the relationship even further and I'm happy to because I really like these guys, but I mean, it's still a slept for making that wont broken out but others.
Mark Smith: Louis, Missouri to cultivate cultivate the relationship even further and I'm happy to be really like you said Let it go. It's OK. So it's an all day avent, so just weekendtoday just But that being said, really, really, absolutely.
Speaker Change: And why commercial I think coach.
Speaker Change: No.
Speaker Change: Okay and there is no there is no easy way to get the Lambert from.
Speaker Change: From S. L. L. So it's an all day event.
Speaker Change: But that being said really really absolutely I mean, we're really at this point, we haven't real war machine here like when we make a deal from from start to finish getting through the deal either on the diligence side.
Mark Smith: I mean, we're really at this point, we have a real war machine here, like when we make a deal from from start to finish getting through the deal.
Speaker Change: Youll side, which is always slow in my world, but regardless it's still.
Speaker Change: Bill.
Speaker Change: Everyone knows that they got to do when we just get it done.
Speaker Change: No.
Speaker Change: Quarterbacking to make sure that the monies in the right place and you know things are all lined up where it's supposed to be in.
Speaker Change: Really really there's I don't.
Speaker Change: Don't want to sound overconfident, but reality is like there's really nothing that we can't we can't get done here I mean.
Speaker Change: I feel confident as far as raising money as far as.
Speaker Change: If we need a lot of money.
Mark Smith: that's not even at this point you know something that would hold us back and as far as organization you know we we hired a third asset manager a bit ago and and now we have three active full-time asset managers for a portfolio of our which is a good number, um, this year, most likely we'd have to hire another It's not an immaterial number, and then same thing in accounting is strong, and we're trying to look for paralegal for the attorney, but other immaterial numbers. But yeah, thanks for the.
Speaker Change: That's not even at this point, you know something that would hold us back and as far as organization.
Speaker Change: We hired a third asset manager a bit ago and now we have three active fulltime asset managers for a portfolio of 130, which is a good number.
Speaker Change: This year, most likely we would have to hire another.
Speaker Change: Wonderful.
Speaker Change: Uh huh.
Speaker Change: It's not a material number.
Speaker Change: And then same thing in accounting is strong.
Speaker Change: We're trying to look for apparel legal for the for the attorney but other.
Speaker Change: Immaterial numbers.
Speaker Change: For G&A.
Speaker Change: No.
Speaker Change: Yeah. Thanks for the question.
Mark Smith: Okay. The only other question for me is just, you guys already talked about kind of how you buy no change in plans and structure there. I'm curious, though, as we think about the pipeline, are you seeing any changes in kind of the deals that you're looking at, whether that be size or structure that maybe others are pushing for? Any changes in the pipeline? We have a whole approach to this business is that we haven't changed our approach, like I talked about, of the deals. As I mentioned earlier, we're the 10-time buyers, we're one of the people that are covered on a day-by-day basis.
Speaker Change: Okay.
Speaker Change: Only other question from me is just you guys already talked about kind of how you buy no change in plans and structure there.
Speaker Change: So as we think about the pipeline you are you seeing any changes in kind of the deals that youre looking at whether that'd be size or <unk>.
Speaker Change: Structure that maybe others are pushing for any changes in the pipeline.
Speaker Change: Well that's been that's been our.
Speaker Change: We'll approach.
Speaker Change: They really haven't changed.
Speaker Change: Right right.
Speaker Change: Over the years.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Wherever you are.
Speaker Change: Sure.
Mark Smith: 2023, we bought $100,000 and $108,000 real estate. Last year, we bought $100,000 and $130,000 real estate. As long as the deal doesn't make sense, and the deal doesn't make sense, Yeah, keep in mind we're we're I would say just to add to what Jeff said, I mean, we have been seeing a lot more. It seems like it seems like a lot more to me. More sale leaseback opportunities where before it was outright sales. Because the last few deals we did were sale leasebacks. In fact, the deals we're working on right now are all sale leasebacks.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Right.
Speaker Change: Okay.
Speaker Change: As long as it real estate.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Great.
Speaker Change: Okay.
Speaker Change: Yes keep in mind.
Speaker Change: I would say just to add to what Jeff said I mean, we haven't seen a lot more.
Speaker Change: Seems like it seems like a lot more to me.
Speaker Change: More sale leaseback opportunities, where before it was outright sales.
Speaker Change: Because the last few deals we did were sale leasebacks in fact that deals are working on right now are all sale leasebacks. So that's been that's been.
Mark Smith: So that's been that's been I'm going to be talking about the the the the the the the the the the the the the the the the Honduras Honduras Recently, we've been talking about how to get them to do ink shares, and so there's that. And then the second side of that is, we can control what their long-term rent is. So instead of them squeezing every penny out up to one and a quarter, they can take a little bit less so they can have a little bit more. It's a little bit less uneasy around the collar for them on the rent number.
Speaker Change: And our arguments.
Speaker Change: Okay.
Speaker Change: Uh huh.
Speaker Change: The opening units are hedged.
Speaker Change: Sure.
Speaker Change: Who.
Speaker Change: Inc shares.
Speaker Change: So there's that and then and then the second side of that is.
Speaker Change: We can we can control what their long term rentals, so instead of them squeezing every penny out.
Speaker Change: During the quarter, we can take a little bit less so they can have a little bit more.
Speaker Change: Yes.
Speaker Change: So a little bit less uneasy around the collar for them.
Speaker Change: One on the rent number so they get they get paid less than that less right and so.
Unnamed Speaker: So they get paid less and they have less rent. I guess that's the one variant that we've seen to answer your question. Okay, great. Thank you. Thank you and there are no further questions in queue.
Speaker Change: Yes, I guess, that's the one variant that we've seen in the <unk>.
Speaker Change: Answer your question.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you and there are no further questions in queue. At this time I would now like to turn the floor back to management for closing remarks.
Unnamed Speaker: At this time, I would now like to turn the floor back to management for closing remarks. Yeah, I guess I'll close it out. I appreciate the interest. from all the folks that joined today. We are working hard for our shareholders. Our objective has always been to bring shareholder returns and to run a nice clean shop that we could all be proud of. And we're gonna keep doing what we're doing, exactly how we've been doing it, which has been working so far. And hopefully we will be providing a good return to our shareholders.
Speaker Change: I guess I'll close it out I appreciate the interest.
Speaker Change: From all the folks who joined today.
Speaker Change: We are working hard for our shareholders. Our objective has always been.
Speaker Change: Two.
Speaker Change: To bring shareholder returns and to run a nice clean shop that we can all be proud of.
Speaker Change:
Speaker Change: And we're going to keep doing what we're doing exactly how we've been doing it which has been working so far and.
Speaker Change: And hopefully we will be providing a good return to our shareholders as expected and with that again. Thank you. So much and have a very nice day and any follow up needed you guys know we're transparent folks.
Unnamed Speaker: as expected and with that again thank you so much and have a very nice day.
Unnamed Speaker: Any follow-up needed?
Unnamed Speaker: You guys know we're transparent folks. Feel free to reach out to us. and we look forward to the interaction.
Speaker Change: Recap.
Speaker Change: And we.
Speaker Change: We look forward through the interaction.
Tom: Have a very good day everybody. Thank you.
Speaker Change: Have a very good day everybody.
Speaker Change: Thank you.
Speaker Change: Thank you. This does conclude today's conference call. You may disconnect at this time and have a wonderful day. Thank you once again for your participation.
Tom: This does conclude today's conference call. You may disconnect at this time and have a wonderful day. Thank you once again for your participation. Standby. Tom, let us know when we're all clear.
Speaker Change: Sandra.
Speaker Change: Standby.
Speaker Change: Tom let us know when we're all clear.
Speaker Change: Sam.