Q1 2026 Strawberry Fields Reit Inc Earnings Call

May 8, 2026

Operator: Good day, welcome to the Strawberry Fields REIT Q1 2026 Earnings Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone keypad. I will now hand the call over to Jeffrey Bajtner, Chief Investment Officer. You may begin.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone keypad.

Speaker #1: I will now hand the call over to Jeff Bitner, Chief Investment Officer. You may begin.

Speaker #2: Thank you, and welcome to Strawberry Fields REIT's Q1 2026 earnings call. I am the Chief Investment Officer, and joining me today on the call are Marsh Gubin, our Chairman and CEO, and Greg Flamion, our CFO.

Jeffrey Bajtner: Thank you, welcome to Strawberry Fields REIT's Q1 2026 earnings call. I am the Chief Investment Officer, and joining me today on the call are Moishe Gubin, our Chairman and CEO, and Greg Flamion, our CFO. Earlier today, the company issued its Q1 2026 earnings results, which are available on the company's investor relations website. Participants should be aware that this call is being recorded, 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 the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and may or may not reference other matters affecting the company's business or the businesses of its tenants, including factors that are controlled.

Speaker #2: Earlier today, the company issued its Q1 2026 earnings results, which are available on the company's investor relations website. Participants should be aware that this call is being recorded, 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 the environment in which it operates.

Speaker #2: These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and may or may not reference other matters affecting the company's business or the businesses of its tenants, including.

Speaker #2: Including factors that are. Control. Additionally, references will be made during the call to non-GAAP financial results, investors are encouraged to review these non-GAAP financial measures as well as explanation and reconciliation of these measures to the comparable GAAP results, included on the non-GAAP measure reconciliation page in our investor presentation.

Jeffrey Bajtner: Additionally, references will be made during the call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures as well as the explanation and reconciliation of these measures to the comparable GAAP results included on the non-GAAP measure reconciliation page in our investor presentation. Now onto discussing Strawberry Fields REIT and our Q1 2026 performance. I wanted to start by sharing some key highlights for the quarter. During the quarter, the company collected 100% of its contractual rents. The company signed a term sheet for a corporate credit facility with availability of up to $300 million. The facility will be comprised of a $100 million term loan and a $200 million revolving line of credit, both having initial 3-year terms and 2 one-year options.

Speaker #2: And now, onto discussing Strawberry Fields REIT and our Q1 2026 performance. I wanted to start by sharing some key highlights for the quarter. During the quarter, the company collected 100% of its contractual rents.

Speaker #2: The company signed a term sheet for a corporate credit facility with availability of up to $300 million. The facility will be comprised of a $100 million term loan and a $200 million revolving line of credit.

Speaker #2: Both having initial three-year terms and two one-year options. Proceeds from the facility will be used to refinance our existing secured bank debt, and the remainder will be available to support acquisition growth.

Jeffrey Bajtner: Proceeds from the facility will be used to refinance our existing secured bank debt, and the remainder will be available to support acquisition growth. The rate on the facility will be SOFR plus 275. The company expects to close on the facility during Q2 2026. Deal-wise, while we did not close on any deals during the quarter, we were quite busy underwriting deals. As we have detailed in past presentations and investor calls, we have our disciplined acquisition model of ten-cap acquisitions that we have been true to over time and expect to stay on this course for the foreseeable future. I am pleased to report that subsequent to quarter end, the company entered into a contract for the acquisition of a hospital campus comprising of a licensed 60-bed hospital, licensed 99-bed nursing facility, and ancillary medical office buildings near Kansas City, Missouri.

Speaker #2: The rate on the facility will be so far plus 275. The company expects to close on the facility during Q2 2026. Deal-wise, while we did not close on any deals during the quarter, we were quite busy underwriting deals.

Speaker #2: As we have detailed in past presentations and investor calls, we have our disciplined acquisition model of 10-cap acquisitions that we have been true to over time and expect to stay on this course for the foreseeable future.

Speaker #2: I am pleased to report that, subsequent to quarter end, the company entered into a contract for the acquisition of a hospital campus comprising a licensed 60-bed hospital, a licensed 99-bed nursing facility, and ancillary medical office buildings near Kansas City, Missouri.

Speaker #2: The purchase price will be $8.6 million, and the company expects to fund the acquisition from the balance sheet. The hospital campus will be added to an existing master lease of a tenant in Missouri, with initial base rents of $860,000 a year and subject to 3% annual rent increases.

Jeffrey Bajtner: The purchase price will be $8.6 million. The company expects to fund the acquisition from the balance sheet. The hospital campus will be added to an existing master lease of a tenant in Missouri with initial base rents of $860,000 a year and subject to 3% annual rent increases. Yesterday, the board of directors approved the Q2 2026 dividend, which will be $0.17 a share and will be paid on 30 June to shareholders of record on 16 June. Lastly, I'd like to point out that Strawberry Fields REIT remains the closest pure-play skilled nursing REIT in the market, with 91.5% of our facilities being skilled nursing facilities.

Speaker #2: Yesterday, the board of directors approved the Q2 2026 dividend, which will also be 17 cents a share, and will be paid on June 30th to shareholders of record on June 16th.

Speaker #2: Lastly, I'd like to point out that Strawberry Fields REIT remains the closest pure-play skilled nursing REIT in the market, with 91.5% of our facilities being skilled nursing facilities.

Speaker #2: Additionally, we have not changed our investment approach of all our investments being triple net leases. Subject to annual rent increases. I would now like to have Greg Flamion, our chief financial officer, discuss the quarter-end end financials.

Jeffrey Bajtner: Additionally, we have not changed our investment approach of all our investments being triple net leases subject to annual rent increases. I would now like to have Greg Flamion, our Chief Financial Officer, discuss the quarter end financials.

Speaker #3: Thank you, Jeff. And welcome, everyone, to the Strawberry Fields first quarter earnings call. Let's begin with a look at our balance sheet. Total assets are $887.6 million, an increase of $43.8 million, or 5.2%, compared to March 31, 2025.

Greg Flamion: Thank you, Jeff. Welcome everyone to the Strawberry Fields Q1 earnings call. Let's begin with a look at our balance sheet. Total assets are $878.6 million, an increase of $43.8 million or 5.2% compared to 31 March 2025. Our asset growth was driven primarily by recent real estate acquisitions, including $112 million of acquisitions completed in 2025. On the liabilities and equity side, increases were driven by financing activity associated with our acquisitions, along with the impact of foreign currency translation adjustments. Together, these factors contributed to an overall growth in our debt balances. Equity decline reflecting lower other comprehensive income driven again by foreign currency translation adjustments. Continuing now to the consolidated statement of income.

Speaker #3: Our asset growth was driven primarily by recent real estate acquisitions, including 112 million of acquisitions completed in 2025. On the liabilities and equity side, increases were driven by financing activity associated with our acquisitions.

Speaker #3: Along with the impact of foreign currency translation adjustments, together, these factors contribute to overall growth in our debt balances. Equity declined, reflecting lower other comprehensive income, driven again by foreign currency translation adjustments.

Speaker #3: Continuing now to the consolidated statement of income. 2026 revenue was $40 million, up $2.7 million compared to March 31, 2025. This represents a 7.1% increase, which was driven by the timing integration of properties acquired in 2025.

Greg Flamion: 2026 revenue was $40 million, up $2.7 million compared to 31 March 2025. This represents a 7.1% increase, which was driven by the timing and integration of properties acquired in 2025. While we experienced higher revenues, the income growth was offset by higher depreciation in interest expense, which was driven by the new property acquisitions. General administrative expenses were also higher due to professional fees, corporate salaries, and other operating expenses. These increases were offset by lower amortization expense. The results in the year-to-date net income of $9.4 million or $0.70 per share compared to $6.9 million or $0.13 a share in Q1 2025. Finally, I would like to end my presentation with some financial highlights.

Speaker #3: While we experienced higher revenues, the income growth was offset by higher depreciation in new property acquisitions. General administrative expenses were also higher due to professional fees, corporate salaries, and other operating expenses.

Speaker #3: These increases were offset by lower amortization expense. The result in the year-to-date net income of $9.4 million or 70 cents per share compared to $6.9 million or 13 cents a share in Q1 2025.

Speaker #3: Finally, I would like to end my presentation with some financial highlights. Our 2026 projected AFFO is $75.4 million, representing an 11.4% compound annual growth rate.

Greg Flamion: Our 2026 projected AFFO is $75.4 million, representing an 11.4% compound annual growth rate. The 2026 projected AFFO per share growth is 10.7%. The 2026 projected adjusted EBITDA is $128.1 million, representing a 13.5% compound annual growth rate. Our yield on leases is 14.2%. The company's net debt to net asset ratio currently sits at 49.0%. As of 31 March 2026, our dividend was $0.16 a share, representing a 5.4% yield and an AFFO payout of 47.3%. The company recently increased the dividend for Q2 to $0.17 a share. This concludes the financial portion of the earnings call presentation.

Speaker #3: The 2026 projected AFFO per share growth is 10.7%. The 2026 projected adjusted EBITDA is $128.1 million, representing a 13.5% compound annual growth rate. Our yield on leases is 14.2%.

Speaker #3: The company's net debt-to-net asset ratio currently sits at 49.0%. As of March 31, 2026, our dividend was $0.16 a share, representing a 5.4% yield.

Speaker #3: And an AFFO payout of 47.3%. The company recently increased the dividend for Q2 to 17 cents a share. This concludes the financial portion of the earnings call presentation.

Speaker #3: I'll now turn it back over to Jeff Batener, who will walk us through the additional portfolio highlights.

Greg Flamion: I'll now turn it back over to Jeffrey Bajtner, who will walk us through the additional portfolio highlights.

Speaker #2: Thank you, Greg. As it relates to our portfolio highlights, our portfolio currently has 143 facilities located in 10 states. This is comprised of 131 skilled nursing facilities, 10 assisted living facilities, and two long-term acute care hospitals.

Jeffrey Bajtner: Thank you, Greg. As it relates to our portfolio highlights, our portfolio currently has 143 facilities located in 10 states. This is comprised of 131 skilled nursing facilities, 10 assisted living facilities, and 2 long-term care acute hospitals. These 143 facilities equate to 15,602 licensed beds. The total value of our portfolio at acquisition is $1.1 billion. Our portfolio currently has 17 consultants advising the operators. The weighted average of these term is 7.1 years. I'm proud to report that our tenants continue to do well, and their rent coverage is 2.1. The net debt to EBITDA of the portfolio is 5.6. We continue to collect 100% of our rents.

Speaker #2: Also, these 143 facilities equate to 15,602 licensed beds. The total value of our portfolio at acquisition is $1.1 billion. Our portfolio currently has 17 consultants advising the operators.

Speaker #2: The average weighted average lease term is 7.1 years. I'm proud to report that our tenants continue to do well and their rent coverage is 2.1.

Speaker #2: The net debt-to-EBITDA of the portfolio is 5.6. We continue to collect 100% of our rents. And, as I mentioned earlier in my remarks, our pipeline remains strong, and it's in excess of $325 million.

Jeffrey Bajtner: As I mentioned earlier in my remarks, our pipeline remains strong, and it's in excess of $325 million. With that, I'd like to pass it on to Moishe Gubin, our Chairman and CEO, to continue the presentation.

Speaker #2: And with that, I'd like to pass it on to Mike Schubin, our chairman and CEO, to continue the presentation.

Speaker #4: Okay. Thank you, Jeff. And thank you, Greg. As they both have alluded to, really we are on a nice trajectory in our business. This slide here reflects the last five years and the projection of 2026.

Moishe Gubin: Okay. Thank you, Jeff. Thank you, Greg. As they both have alluded to, really, we are on a nice trajectory in our business. This slide here reflects the last five years and projection of 2026 AFFO growth, which gives you a cumulative growth rate of 11.4%. We're particularly proud of that. The slide after that is base rent and just similar timeframe, similar trajectory, 13.4% growth rate. Our stock price over last year and we've seen highs, and we're currently trading, I mean, we're trading too low, but we're on an up from how we ended the quarter, and that was right when I think all that Iran stuff started.

Speaker #4: AFFO growth, which gives you a cumulative growth rate of 11.4%. We're particularly proud of that. The slide after that is base rent, and just similar timeframe, similar trajectory.

Speaker #4: 13.4% growth rate. Our stock price over the last year—and we've seen highs—and we're currently trading, we're trading too low. But we're on an up from how we ended the quarter, and that was right when I think all that Iran stuff started.

Moishe Gubin: Comparatively between us and our peers, Strawberry is right in the middle. We're at 26% on our stock. If you would've bought the stock a year ago till 31 March, 26.4% return. Our trading multiples are still the laggard in the marketplace. I'm still dumbfounded on why that is. We're at 9.5x when the average is right around 14 or so, and CareTrust is leading the pack at 21.4%. Our AFFO payout ratio continues to be the lowest from everybody else, and that's even I'm sure with the increase of our dividend that we announced today. Our 47% payout ratio and, you know, that's the lowest of our peers.

Speaker #4: Comparatively, between us and our peers, Strawberry is right in the middle. We're up 26% on our stock if you would have bought the stock a year ago, through March 31st.

Speaker #4: 26.4% return. And our trading multiples are still the laggard in the marketplace. Still dumbfounded on why that is. We're at nine and a half times when the average is right around 14 or so.

Speaker #4: And CareTrust is leading the pack at 21.4%. Our AFFO payout ratio continues to be the lowest from everybody else. And that's even, I'm sure, with the increase of our dividend that we announced today.

Speaker #4: We're at a 47% payout ratio, and that's the lowest among our peers. We find that our best use of our money is staying within the REIT standards.

Moishe Gubin: We find that our best use of our money is staying within the REIT standards, the REIT rules and using the rest of the cash that we're generating to grow our portfolio. Our dividend yield, this is at 31 March at $0.16, is 4.9%. Obviously, with an increase, that should be somewhere in the 5s, maybe closer to 6. Like Jeff said earlier, we remain the pure play, SNF Real Estate, you know, SNF REIT, and we're gonna stay stick with that because that's really where our comfort zone is, doing exactly what we're doing, staying very disciplined. We've been preaching this for years and years and years, we're gonna continue to do exactly what we do.

Speaker #4: The REIT rules and using the rest of it, the rest of the cash that we're generating, to grow our portfolio. Our dividend yield—this is at March 31st—is at $0.16.

Speaker #4: It's 4.9%. Obviously, with an increase, that should be somewhere in the fives—maybe closer to six. Like Jeff said earlier, we remain a pure play SNF real estate.

Speaker #4: SNF REIT. And we're going to stay stick with that because that's really where our comfort zone is—doing exactly what we're doing, staying very disciplined.

Speaker #4: We've been preaching this for years and years and years, and we're going to continue to do exactly what we do. And in years where there are fewer deals, we'll just continue to stockpile cash, pay down debt, and save our money for when we get the deals.

Moishe Gubin: In years where there are fewer deals, we'll just continue to stockpile cash, pay down debt, and save our money for when we get the deals. I think this year we'll still meet our target of between $100 million to $150 million, maybe exceed it. It's been a slow start, but we expect this quarter to really pick up and then actually have a bunch of closings in Q3. The next slide just shows our rent coverage from our tenants. That continues to grow. Again, every time we close on deals, we're starting every deal at a 1.25 coverage ratio, therefore we're our own worst enemy. Where last year we closed $112 million or so or something in 19 properties.

Speaker #4: I think this year we'll still meet our target of between $100 million and $150 million, maybe exceed it. It's been a slow start, but we expect this quarter to really pick up, and then actually have a bunch of closings in the third quarter.

Speaker #4: The next slide just covers—shows our rent coverage from our tenants. That continues to grow. Again, every time we close on deals, we're starting every deal at one and a quarter.

Speaker #4: Coverage ratio. And so, therefore, we're our own worst enemy. Where last year we closed $112 million or so, or something, in 19 properties. So you take that, it weights us down.

Moishe Gubin: You take that, it weighs us down, as every quarter goes by, our tenants' results improve. Our growth rate per share, we're beating everybody in the marketplace. That's, you know, it's almost inverse to the payout ratio. We should continue to do that. I mean, collectively between the payout ratio, I mean the dividend yield and the AFFO per share growth, we're at the end of the day better return than our peers, averaging out at a 16% return a year. The next slide is probably one of the most important slides, and that basically shows you know, really how the math of what we do. The projected 2026 revenue of AFFO is over $75 million. Again, this is before deals.

Speaker #4: And as every quarter goes by, our tenants' results improve. Our growth rate per share—we're beating everybody in the marketplace. And that's almost inverse to the payout ratio.

Speaker #4: And we should continue to do that. I mean, collectively, between the payout ratio—I mean, the dividend yield and the AFFO per share growth—we're, at the end of the day, a better return than our peers year.

Speaker #4: The next slide is probably one of the most important slides. And that basically shows you, really, how the math of what we do.

Speaker #4: So, the projected '26 revenue of AFFO is over $75 million. Again, this is before deals. This is not projecting anything out—this is just what we have running today.

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

Speaker #4: So $75 million, the payout ratio for that is 47%. We take cash flow close to $40 million. We then take that $40 million and then we're able to buy—we want to stay right now at 49% leverage.

Speaker #4: So if we want to stay at 49%, that basically gives us the ability to borrow about $50 million on that. So we could buy $90 million without changing our leverage at all.

Speaker #4: The reality is, we have other cash sitting that we should be able to get more money out the door. And that's what we've done until now.

Speaker #4: And we expect that to continue. The next slide is probably what are the biggest focuses we have right now. We should be announcing in the next little bit that we intend on refinancing a good portion of this money that's maturing this year.

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

Speaker #4: We expect to refinance half of it, probably in the next couple of weeks. And then we'll do the other half, probably sometime in August.

Speaker #4: Most of this, where we end up in this situation, is that once '26 ends, we should have almost divided up equally over four or five years.

Speaker #4: Laddered debt maturing so that every year we could be with a year's runway, be able to sit there and refinance our debts. And that should be really good for having a business that can perpetuate long-term.

Moishe Gubin: That should be really good for, you know, having a business that can perpetuate, you know, long term. You know, it's interesting to note over here, really, I made a mistake a few years ago, and I made all the maturity dates right around the same. It was intentional. The one thing that I missed is that there was a prepayment penalty all the way to the end. To avoid paying prepayment penalties, we've gone down this road where now we have about 5 months left maturing on most of this debt. We're gonna refinance most of it soon, and the rest of it in probably a few months. That's this slide.

Speaker #4: It's interesting to note over here, really, I made a mistake a few years ago. And I made all the maturity dates right around the same.

Speaker #4: And it was intentional. The one thing that I missed is that there was a prepayment penalty all the way to the end. And to avoid paying prepayment penalties, we've gone down this road where now we have about five months left maturing on most of this debt.

Speaker #4: And so we're going to refinance most of it—most of it soon. And the rest of it in probably a few months. So that's this slide.

Speaker #4: The next slide really just shows how diversified our portfolio is at this point. The only really large consultant or state is Indiana, which happens to be our best state.

Moishe Gubin: The next slide really is just shows how diversified our portfolio is. At this point, the only really large consultants or state is Indiana, which happens to be our best state, which is sitting at 25% of the portfolio and 25% of the base rent. That being said, everything else is pretty even wedges, you know, in high single digits, middle double digits. You know, that's for an investor that's wanting to have a diversified risk. You know, our portfolio is not subject to. We don't have a bunch of single assets that where if something goes wrong in one asset, it would hurt us. Most of our stuff's are in master leases, as most of you probably know.

Speaker #4: Which is sitting at 25% of the portfolio, and 25% of the base rent. That being said, everything else is pretty even wedges, in high single digits, middle double digits.

Speaker #4: And that's for an investor that's wanting to have a diversified risk. Our portfolio is not subject to—we don't have a bunch of single assets where, if something goes wrong in one asset, it recurs to us.

Speaker #4: Most of our stuff is in master leases, as most of you probably know. And if we had a problem in one specific state, right, we'd be able to get through everything without there being anything really big.

Moishe Gubin: You know, if we had a problem in one specific state, right, we'd be able to get through everything without there being anything, you know, anything really big as a risk. Next slide just really talks about where we're located. As you can tell, we've stayed mainly in the Midwest, and we, God willing, will be announcing a deal for a new state in the Midwest in hopefully the next couple of weeks. It's good. Business is good. We're collecting all of our rents, like I think Jeff said earlier. Business is good. You know, we have no issues. On our last slide for today, after this, we'll hand it off to the moderator to take questions from the audience.

Speaker #4: As a risk. Next slide just really talks about where we're located. As you could tell, we've stayed mainly in the Midwest. And we got going—will be announcing a deal for a new state in the Midwest in the next, hopefully, the next couple of weeks.

Speaker #4: It's good. Business is good. We're collecting all of our rents. I think Jeff said earlier, and business is good. I know we have no issues on our last slide for today.

Speaker #4: And after this, we'll hand it off to the moderator to take questions from the audience. This really is one of my favorites because it's simple, simple, simple English.

Moishe Gubin: This really is one of my favorites because it's in simple English. You look at 3 months ended 31 March 2026 versus 2025, and you see our net income, you know, went up to $2.5 million. FFO, you know, $2.7 million, and AFFO, you know, $2 million or so. That's what it's all about, really showing at the end of the day, the end of that $75 million of annualized AFFO expected. The graph to the right, the financial to the right is EBITDA. Again, same story, just adding back depreciation, amortization, and interest to come up with EBITDA number. You know, we went up, you know, $2.3 million or so.

Speaker #4: You look at the three months ended March 31st of '26 versus '25, and you see our net income went up two and a half million dollars.

Speaker #4: And FFO, $2.7 million. And AFFO, $2 million or so. And that's what it's all about. Really showing at the end of the day, they have $75 million of annualized AFFO expected.

Speaker #4: The graph to the right, the financial to the right is EBITDA. Again, same depreciation, amortization, and interest to come up with the EBITDA number. We went up $2.3 million or so.

Speaker #4: And adjusted EBITDA a little bit less than $2 million. And I'm super, super proud of all this, and with that, I will pass this back to the moderator to take on your questions.

Moishe Gubin: Adjusted EBITDA, a little bit less than $2 million. I'm super proud of all this. With that, I will pass this back to the moderator to take on your questions.

Speaker #1: Thank you. Liaison, gentlemen, as a reminder, to ask a question at this time, you will need to press star 11 on your telephone keypad and wait for your name to be announced.

Richard Anderson: Our first question will come from the line of Richard Anderson with Cantor Fitzgerald. Your line is now open.

Speaker #1: Please stand by while we compile the Kenner roster. Our first question will come from the line of Richard Anderson with Kansas Fitzgerald. The line is now open.

Operator: Our first question will come from the line of Richard Anderson with Cantor Fitzgerald. Your line is now open.

Speaker #5: Hey, good morning, everyone—or good afternoon, where you are. So, in mentioning the pipeline growing, I do see last quarter it was—excuse me—it was 250.

Moishe Gubin: Good morning.

Richard Anderson: Good morning.

Richard Anderson: In mentioning the pipeline growing, I do see last quarter it was $250, now it's $325. I'm curious what the, what the additions were, in not just the $75 million, but in form. Like, you did something this, in Q2 with, you know, a hospital campus and some medical office. I'm curious if that will be more of the mix of stuff that you do going forward rather than just, you know, pure play skilled nursing. I'm just curious, you know, your mindset along that line.

Speaker #5: Now it's 325. I'm curious what the additions were—not just the $75 million, but in form. You did something in the second quarter with a hospital campus and some medical office.

Speaker #5: I'm curious if that will be more of the mix of stuff that you do going forward, rather than just pure-play skilled nursing. I'm just curious—what's your mindset along that line?

Speaker #6: So, Rich, thank you for your question. Happy to hear your voice. Hope to see you at NAREIT. I would say that, no, we're going to stick with nursing homes.

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

Speaker #6: Not all, but most of our deals that were close to getting offers accepted on are skilled nursing facilities. And a few of them are in new states for us.

Speaker #6: And yeah, the increase of the pipeline is deals that are just slow to get done. A lot of times, people would get disinterested, but we sit there and we just keep working it, and we follow up with people—to the testament of Jeff here on the call.

Speaker #6: It's persistency and staying with them. And just some deals, and just lately, it seems like deals are taking longer. We had a deal that we signed up, and actually CareTrust came and stole it from us.

Moishe Gubin: Just some deals and lately seem like deals are taking slower. We had a deal that we signed up and actually CareTrust came and stole it from us. That would've been a nice deal for us and they offered like $25 million more than us, which is crazy because the other people had already accepted our offer. That being said, no. We don't wanna change what we're doing. This hospital MOB deal comes with a nursing home, and we found value that the purchase price we're paying, the hospital and the MOB basically are a throw-in, and the nursing home itself had more value than what we're paying.

Speaker #6: And that would have been a nice, nice deal for us. And they offered like $25 million more than us, which is crazy because the other people had already accepted our offer.

Speaker #6: That being said, we don't want to change what we're doing. This hospital MOB deal comes with a nursing home, and we found value that the purchase price we're paying for the hospital and the MOB basically means the nursing home is a throw-in.

Speaker #6: And the nursing home itself had more value than what we're paying. So we feel like we're getting a great deal on our operator that's taking it from us, is somebody that has experience as a doctor practice, physician practice.

Moishe Gubin: We feel like We're getting a great deal, and our operator that's taking it from us is somebody that has experience, is a doctor practice, assistant practice, and we feel it's gonna be a nice addition to our portfolio.

Speaker #6: And we feel it's going to be a nice addition to our portfolio.

Speaker #5: Okay. And then I would add to Maisha's point there that, I mean, this number—it's almost like a living and breathing number. We constantly reevaluate the pipeline every week.

Richard Anderson: Okay. Then.

Moishe Gubin: I would add to, Moish's.

Jeffrey Bajtner: I would add to, Moish's.

Jeffrey Bajtner: Sure.

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

Jeffrey Bajtner: Sure.

Speaker #5: And the only items that are really being included with this are just deals that we think there is an opportunity to complete. So, as Maisha said, I mean, this has been some deals that have been sitting there over time, but also, I mean, the SNF deal market has been picking up steam in the past, I'd say, in the past month.

Speaker #5: So we're looking at deals, as Maisha said, in new states, existing states, and we're excited to see what we can do the rest of this year.

Speaker #5: Okay. And then my second question, you mentioned CareTrust. How typical are you running into REIT peers in terms of competitive processes to get deals done?

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

Speaker #5: Is that sort of an anomaly, or are you seeing some name-brand folks that we all know and love out there that you're competing with?

Speaker #5: Thanks.

Speaker #6: Yeah. Historically, we've never run up against them. But in the last year or two, as we're trying to—I mean, we look at every deal—but as we're trying to do bigger deals, just so that we figured the marketplace maybe would be more excited about our stock and who we are if we can announce bigger deals.

Moishe Gubin: Yeah. You know, historically we'd never ran up against them.

Richard Anderson: Right.

Moishe Gubin: But in the last, like year or two, as we're trying to, I mean, we look at every deal, but as we're trying to do, you know, bigger deals just so that, you know, we figured, you know, the marketplace maybe would be more excited about our stock and who we are if we can announce, you know, bigger deals and do bigger deals, you know, all with the same metrics, exactly how we buy, the same ten-cap, you know, 10% cash and cash return day 1, our regular routine and rules of how we buy. So when it gets to these bigger deals, which was our original thought, which was, you know, years ago, is that's where, that's where the competitive bids are coming in.

Speaker #6: And do bigger deals, all with the same metrics. Exactly how we buy—the same 10-cap, 10% cash-on-cash return day one. Our regular routine and rules of how we buy.

Speaker #6: And so, when it gets to these bigger deals—which was our original thought, which was years ago—is that's where the competitive bids are coming in.

Speaker #6: And we lost one deal to Welltower, and we lost one deal to CareTrust. And that was after we basically had a handshake with a seller.

Moishe Gubin: We've lost one deal to Welltower, and we lost one deal to CareTrust. Then that was after we basically had a handshake with the seller. You know, you spend so much time on these things, and then someone else comes in and says, Okay, I'll just throw more money at it. We're just gonna keep doing what we're doing. I don't. We're not changing our model to pay more. I'm not gonna get disinterested to stop looking at the bigger deals. I think there's a benefit. I love CareTrust, and I love Dave Sedgwick, but I could tell. I've said that probably 1,000 times.

Speaker #6: And so you spend so much time on these things, and then someone else comes in and says, "Okay, I'll just throw more money at it." So we're just going to keep doing what we're doing.

Speaker #6: We're not changing our model to pay more. And I'm not going to get disinterested or stop looking at the bigger deals. I think there's a benefit, and I love CareTrust, and I love Dave Sedgwick, but I could tell—and I said that probably a thousand times.

Speaker #6: But I just think that we offer something on a personal level with a lot of the sellers. And so we should be able to pull down these deals, and I would say that hopefully, it will be an anomaly that we've lost a few deals to the bigger boys.

Moishe Gubin: I just think that we're just You know, we offer something on a personal level with a lot of the sellers. So we should be able to pull down these deals. I would say that it hopefully will be an anomaly that we lost a few deals to the bigger boys.

Speaker #5: Yeah. Okay. Thanks for the honesty, as always, Maisha. Have a good day.

Richard Anderson: Yeah. Okay, thanks for the honesty as always, Moish. Have a good day.

Speaker #6: Always rich. That's how I roll. Thank you.

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

Speaker #7: Thank you. Our next question is coming from the line after I've met him with Alliance Global Partners. The Alliance is now open.

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

Speaker #8: Yeah, thank you. I wanted to ask you about the acquisition pipeline. I think on the last earnings call you had mentioned the target of $100 to $150 million of acquisitions this year.

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

Speaker #8: Given that you had a slow start in one queue, are you still hoping to hit that target?

Speaker #6: Yeah, yeah, 100%. I'm hopeful that the third quarter will close somewhere in the $90 million to close to $100 million range. And I'm hoping that in the fourth quarter, we'll have another $15 to $30 or $40 million, unless something else pops up.

Moishe Gubin: Yeah, 100%. I'm hopeful that Q3 will close somewhere in the $90 million to close to a $100 million range. I'm hoping that in Q4, we'll have another 15 to like 30 or 40, unless something else pops up. Right now we're looking at everything's gonna get loaded into Q3 and Q4, and we should hit easily the $100, and hopefully we should, you know, do and break $150.

Speaker #6: So right now, we're looking at everything's going to get loaded into third quarter and fourth quarter. And we should hit easily the 100, and hopefully we should do and break 150.

Speaker #8: And so for the third quarter, $90 to $100 million, are you guys looking at a portfolio?

Gaurav Mehta: for Q3, $90 to 100 million, are you guys looking at like a portfolio?

Speaker #6: Yeah. We're looking at—we have one deal, we have a deal that we didn't announce yet that should be in the $80 million range for a group of homes in a new state.

Moishe Gubin: Yeah, we have a deal that we didn't announce yet that should be in the 80s for a group of homes in a new state. We have this deal in Missouri that we've announced. We have another deal that we also didn't announce that's going to also add to a master lease in a state we're already in. That'll be about a $15 million deal. Between those three deals alone, you're looking at $107, $108 million. We have some other things.

Speaker #6: And then we have this deal in Missouri that we've announced. We have another deal that we also didn't announce that's going to also add to a master lease in a state we're already in.

Speaker #6: That'll be at a $15 million deal. And so, between those three deals alone, you're looking at $107, $108 million. And we have some other things—we've got a portfolio elsewhere with a newish, but as someone who's a tenant of ours, or will be a tenant of ours real soon, another package that we're looking at with them.

Moishe Gubin: We got a portfolio elsewhere with a newish, but someone who's a tenant of ours or will be a tenant of ours real soon, another package that they were looking at with them. If that deal hits, that'll get us to, like, about $145 or $150 or so. The good news is we will have our line of credit up and running by the end of this month. We're gonna have a new bond issued next week or in the next 2 weeks in Israel to basically kick the can down the road on some of our debt.

Speaker #6: And so if that deal hits, that'll get us about 145 or 150 or so. So, the good news is we'll have our line of credit up and running by the end of this month.

Speaker #6: We're going to have a new bond issued next week, or in the next two weeks, in Israel, to basically kick the can down the road on some of our debt.

Speaker #6: And we'll have availability between the line of credit and, without doing an ATM, without doing a fundraise, without taking on any other additional debt, we have the ability, based on our just available borrowings and sites of cash in our books, we'll have about $150 million or so of availability right around.

Moishe Gubin: We'll have availability between the line of credit, and without doing an ATM, without doing a fundraise, without taking on any other additional debt, we have the ability based on our just available borrowings, besides the cash in our books, we'll have about $150 million or so of availability or right around. We have the cash to be able to do all this stuff and keep ourselves in the same leverage band that we're in right now. Right now we're at 49%, which is basically in the middle of where we wanna be. I think we're in a good spot.

Speaker #6: So, we have the cash to be able to do all this stuff, and keep ourselves in the same leverage band that we're in right now.

Speaker #6: Right now we're at 49%, which is basically right in the middle of where we want to be. And I think we're in a good spot.

Moishe Gubin: I would have liked. I got to, like, kind of plan it out better for future years that we, you know, have stuff that we push into Q1. When we come to the Q1 call, you know, I can say, Hey, we closed at least this, that, or the other thing. Sounds a little better than, Well, we had a great quarter. We made a lot of money. We are doing great. We are collecting 100% of our. Which also sounds good, by the way. It just does not sound. I think it would sound more, more, you know, better if I would add a deal, you know, closing in Q1 that I could be able to, you know, walk around like a peacock about. It is what it is.

Speaker #6: I would have liked if I got to kind of plan it out better for future years, that we have stuff that we push into first quarter, so we come to the first quarter call.

Speaker #6: I could say, 'Hey, we closed at least this, that, or the other thing.' Sounds a little better than, 'Well, we had a great quarter.'

Speaker #6: We made a lot of money. We're doing great. We're collecting 100% of our, which also sounds good, by the way. It just doesn't sound—I think it would sound better if I could add a deal closing in the first quarter, that I could be able to walk around like a peacock about.

Speaker #6: But it is what it is.

Speaker #8: Right. Thanks for those details. As a follow-up, I wanted to ask you—in the earnings release, you talked about investing some time in different processes within the company this quarter.

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

Speaker #8: Can you maybe provide some color on what those processes were?

Speaker #6: Yeah. Well, what we were trying to refer to is, I think we're referring to the refinancing and cleaning up our debt. A lot of effort goes into it. A big portion of our debt is sitting in Israeli bonds.

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

Speaker #6: Which I'm proud of. I like the relationship we have with the Israeli market. And so our time and effort has been on creating a couple of new series that we'll have in Israel to clean up the three series that we're having that mature this year.

Speaker #6: The other thing has been creating the line of credit with the bank, which is something that all our other peers have.

Speaker #6: And we thought maybe that that was one of the issues that maybe investors maybe think about, is that when they look at our company, they go, 'Well, we don't have the dry powder to be able to close on certain deals.' And we wanted to be able to have these lines of credit so we could be able to tell potential investors, no, we have plenty of dry powder.

Moishe Gubin: We thought maybe that was one of the issues that maybe investors think about, is that when they look at our company, they go, Well, we don't have the dry powder to be able to close on certain deals. We wanted to be able to have these lines of credit so we could be able to tell, you know, potential investors, No, we have plenty of dry powder. I mean, everyone who knows me and knows our business knows that there hasn't been a deal that we've made that we couldn't close.

Speaker #6: I mean, everyone who knows me and knows our business knows that there hasn't been a deal that we've made that we couldn't close. But maybe an investor that doesn't know that, and doesn't have a chance to speak to me.

Moishe Gubin: You know, maybe an investor that doesn't know that and hadn't had a chance to speak to me, or one of my guys that they might not have known that. Therefore, we wanna be able to have that so that when we put that into the queue and future press releases, we're able to say, Yeah, we just have this line of credit that we could draw on, and then we went to the public, you know, sold stock to pay down debt and keep ourselves, you know, between 45% and 55% on the leverage side. That's basically what we've been working on. Outside of, you know, I'm always looking at deals.

Speaker #6: Or one of my guys, that they might not have known that, and therefore we want to be able to have that so that when we put that into the queue and future press releases, we're able to say, 'Yeah, we just have this line of credit that we could draw on.' And then we went to the public, sold stock to pay down debt.

Speaker #6: And keep ourselves between 45 and 55 percent on the leverage side. So that's basically what we've been working on. Outside of, I'm always looking at deals.

Speaker #6: But it was just cleaning up our debt stack and the fundamentals of our balance sheet, so that going forward we'll have a normal, laddered debt maturity, and we'll have a line of credit that's just there for us to be able to use when we need to—when we need to buy something.

Moishe Gubin: It was just cleaning up our debt stack and the fundamentals of our balance sheet so that going forward, we'll have a normal laddered, you know, debt maturity and we'll have a line of credit that's just there for us to be able to use when we need to, when we need to buy something.

Speaker #8: All right. Thanks for those details. That's all I had.

Gaurav Mehta: All right. Thanks for those details. That's all I had.

Speaker #6: Thanks, Skwarev. Hopefully, we'll see you at NERID as well.

Moishe Gubin: Thanks, Gaurav. Hopefully, we'll see you at NAREIT as well. Please, God.

Speaker #9: Thank you. Our next question is coming from the line of John Messer with Riley Securities. Helen, your line is now open.

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

Speaker #10: Hi, everyone. Good afternoon. Good morning. Maybe keep going back to term loan. Post-closing, what's the appetite for taking the term loan side, swapping out any of that for a fixed rate versus leaving draws on that floating?

John Massocca: Hi, everyone. Good afternoon or good morning. Maybe keep going back to term loan. Post-closing, you know, what's the appetite for, sticking with term loan side, swapping out any of that for a fixed rate versus leaving draws on that floating?

Moishe Gubin: That's an interesting question. I like it. Well done, John. You didn't stump me. I just haven't thought about it. You know, I think when you're in an interest rate environment that most people expect to be either. At this point, I mean, the way the economy is running, it seems like it's going to remain stable. Interest rates are definitely not going up. Usually when you have that, you usually don't want to lock in fixed. From my perspective, I hadn't given it thought, so maybe it's something I'm going to think about. I think that at this point in a declining rate environment, I think it's probably not wise for me to do fixed. It's something to think about, and I appreciate the question.

Speaker #6: That's an interesting question. I like it. Well done, John. You didn't stump me. I just haven't thought about it. I think when you're in an interest rate environment that most people expect to be either—at this point, I mean, the way the economy is running, it seems like it's going to remain stable.

Speaker #6: Interest rates are definitely not going up. Usually, when you have that, you usually don't want to lock in fixed. From my perspective, I hadn't given it thought.

Speaker #6: So maybe it's something I'm going to think about. But I think that at this point, in a declining rate environment, I think it's probably not wise for me to do fixed.

Speaker #6: But it's something to think about, and I appreciate the question. In years past, we relied on HUD being the exit for our debt, and then that's long-term, 40-year money.

Moishe Gubin: You know, in years past, we relied on HUD being the exit for our debt and then, you know, that's long-term 40-year money. In the last few years since Corona, you know, the way HUD's been as far as lending and our relationship specifically with HUD has been, you know, I don't know the right word. I don't wanna put an adjective on it that makes anyone nervous, it's just like, it's just been we're not going anywhere. It's stagnant, that relationship. It sort of didn't have to think about, you know, where to place the long-term debt and then to lock things in for a fixed rate.

Speaker #6: But in the last few years, since corona, the way HUD's been as far as lending and our relationship specifically with HUD has been—I don't know the right word.

Speaker #6: I don't want to put an adjective on it that makes anyone nervous. But it's just been—we're not going anywhere. It's stagnant, that relationship.

Speaker #6: So historically, I didn't have to think about where to place the long-term debt and to lock things in for a fixed rate. But yeah, that's a great question, because that's something now that has to be in the forefront for us to think about.

Moishe Gubin: Yeah, but that's a great question because that's something now that has to be in the forefront for us to think about. I think we're kind of hedged because of the declining rate environment, which is. That's my prognosis. I could be completely wrong. I mean, of course, I could always be completely wrong, That's my thought. You know, my background is a little bit banking as well, so in the banking world, we're thinking that it's the same thing, stable to declining rate environment. I think I answered your question, John. I don't know.

Speaker #6: I think we're kind of hedged because of the declining rate environment, which is—that's my prognosis. I could be completely wrong. I mean, of course, I could always be completely wrong.

Speaker #6: But that's my thought. And my background is a little bit banking as well. So in the banking world, we're thinking that it's the same thing, stable to declining rate environment.

Speaker #6: I think I answered your question, John. I don't know.

Speaker #10: No, that was helpful color. And maybe with that, it sounds like we're still in the market with potentially new Israeli bonds, or at least refinancing the existing Israeli bonds.

John Massocca: No, I think that's helpful color. It sounds like, still in the market, you know, with, you know, potentially new Israeli bonds or at least refinancing the existing Israeli bonds. What's pricing look like on that today as you kind of work through those? I guess, how would you think about maturity dates or term on that debt? 'Cause it sounds like you're gonna probably break out the refinancing into a couple of different tranches. Just kind of curious how that's shaping out as you start the process or work through the process, I should say, today.

Speaker #10: What's pricing look like on that today as you kind of work through those? And I guess, how would you think about maturity dates or term on that debt?

Speaker #10: Because it sounds like you're going to probably break out the refinancing into a couple of different tranches. Just kind of curious how that's shaping out as you start the process, or work through the process, I should say, today.

Speaker #6: Yeah. No. Yeah. And we're towards the end of the process. And it's a great question. Various suit. I love it. It's about four and a half year money.

Moishe Gubin: Yeah. No. Yeah. Well, we're towards the end of the process, and it's a great question. Very astute. I love it. It's about 4.5 year money. The pricing today is about 6.85 or so. You know, you gotta add in a little bit in the fees, but I don't think anyone ever mentions that on any of these calls, so I'm not sure if I'm so sure about that or not. The actual interest rate's gonna be about 6.85, 4.5 year money, expiring the end of 2030. When we do the second tranche, in August, September, that'll be expiring sometime in maybe June 30 or 2031.

Speaker #6: And the pricing today is about $6.85 or so. And you have to add in a little bit in the fees. But I don't think anyone ever mentions that on any of these calls.

Speaker #6: So I'm not sure if I'm so sore about that or not. But the actual interest rate is going to be about 6.85, four and a half year money, expiring the end of '30.

Speaker #6: And then when we do the second tranche, in August, September, that'll be expiring sometime, maybe June 30th of '31. And the idea for all of this is—the corrective measure from my mistake that I made a few years ago—is that all of it's going to have a prepayment holiday for the last six months.

Moishe Gubin: The idea for all of this is, the corrective measure from my mistake that I made a few years ago, is all of it's gonna have a prepayment holiday for like the last six months, for me to be able to refinance it, you know, instead of going closer to the wire, to be able to refinance it earlier in the mix.

Speaker #6: For me to be able to refinance it, instead of going closer to the wire—to be able to refinance it earlier in the mix.

Moishe Gubin: Just on that topic, the line of credit and term loan that we created for, you know, with the conventional bank, those are gonna have 2 one-year extensions at the end of them so that during those 2 one-year extensions, during the first one-year extension, that'll be the time that we work on the extension or the new debt to replace that. That also, that ends in 5 years. Kind of the way we're positioning it is we're kicking the can of 2026 money, and part of 2028 money, and we're ending up with half in 2030 and half in 2031, basically.

Speaker #6: And just on that topic, the line of credit and term loan that we created with the conventional bank, those are going to have two one-year extensions at the end of them.

Speaker #6: So that during those two one-year extensions—so during the first one-year extension—that will be the time that we work on the extension or the new debt to replace that.

Speaker #6: And that also ends in five years. So, kind of the way we're positioning it is we're kicking the can on '26 money, and part of '28 money.

Speaker #6: And we're ending up with half in '30 and half in '31, basically. And then comes the 2020—the stuff that's going to mature in '27—we could start working on now to kind of push to '32.

Moishe Gubin: You know, comes the 2020, the stuff that's gonna mature in 2027, we could start working on now to kind of push to 2032. We'll just start on a rolling, you know, maturity ladder of 1 year at a time, then we could just kick the can 5 years down on each thing. As we grow in what we do, then that tranche will just have the additional of the new stuff together with that and kind of push it down 5 years. Hope that makes sense.

Speaker #6: And then we'll just start on a rolling maturity ladder of one year at a time, that we could just kick the can five years down on each thing.

Speaker #6: And then as we grow in what we do, then that tranche will just have the addition of the new stuff together with that and kind of push it down five years.

Speaker #6: Hope that makes sense. But I think it's my idea, and I'm not planning on going anywhere—God willing, God keeps me alive and healthy, and that the shareholders want me to keep leading them.

Moishe Gubin: That's I think I My idea, and I'm not planning on going anywhere, God willing, God keeps me alive and healthy, and that the shareholders want me to keep leading them and keep doing this, is that I wanna create all these processes that the business is able to be perpetuated long term, you know, so that the normal maturities every year becomes the process. We have to refinance, you know, this year's batch of debt that's maturing, push it down 5 years, and have that rolling every year as a normal routine.

Speaker #6: And keep doing this, is that I want to create all these processes so that the businesses are able to be long-term. So that the normal maturities every year become the process.

Speaker #6: We have to refinance this year's batch of debt that's maturing. Push it down five years, and have that rolling every year as a normal routine.

Speaker #6: Same thing with all the other processes that we have in place with how we buy and just even IR, how we deal with the public, and all of these things. I want the process to be so clear and clean that we should be able to perpetuate it on a regular routine.

Moishe Gubin: Same thing with, you know, with all the other processes that we have in place with, you know, how we buy and, you know, just even IR, how we deal with the public and all of these things. I want the process to be so clear and clean that we should be able to perpetuate it on a regular routine. Not to be robotic, but to be able to be reliable and credible.

Speaker #6: Not to be robotic, but to be able to be reliable and credible.

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

Speaker #10: Yeah, and then maybe switching gears a little bit—and then maybe switching gears a little bit—in terms of the potential acquisition in a new state, is that with an existing consultant relationship or a new one?

Speaker #10: And I guess, what's the appetite for some of the existing consultant relationships to try to grow here in the current market?

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

Speaker #6: So the starting point of that question is that our relationships with our tenants are amazing. We don't have any negative communication or relationships. They're all fantastic.

Speaker #6: I mean, all of us—I consider everybody part of the family. And it's really, really good. So from our current roster of tenants to the folks in Oklahoma, we're growing with them.

Speaker #6: Those deals, we've consistently been buying more deals in Oklahoma. Texas, we're growing with current operators. Missouri, we're growing with current operators. Ohio, over the years, we haven't grown.

Speaker #6: And believe me, I love those tenants. We just renewed. They've been tenants, really, now more than 10 years. It just really hasn't grown, unfortunately.

Speaker #6: And we're very, very close. I would call close friends. And, but the newer things for the newer packages are all brand new operators that are not new to me as human beings.

Moishe Gubin: I would call us we're close friends. But the newer things for the newer packages are all brand new operators that are not new to me as human beings. Some of them are borrowers at my bank, some of them are just people that have been industry that we know for many years. We have 2 new relationships in 2 different states that we're starting with now, God willing, that we're gonna start with a decent size, between 5 and 10 homes at each portfolio. God willing, it should be great.

Speaker #6: Some of them are borrowers at my bank. Some of them are just people that have been in the industry that we’ve known for many years.

Speaker #6: And so we have two new relationships in two different states that we're starting with now, God willing. We're going to start with a decent-sized—between 5 and 10 homes at each portfolio.

Speaker #6: And, God willing, it should be great. And again, any deals that come along, we have a commitment between our tenant and us that we're looking in. So, out of the 10 states we're in, there's probably five or six of them that we want to grow in.

Moishe Gubin: Again, if, you know, any deals that come along, I, you know, we have a commitment between our tenant and us that we're looking. So out of the 10 states we're in, there's probably five or six of them that we wanna grow in, and we don't wanna grow with, you know, the related party stuff that's been diminishing. That's down to 46% of the portfolio, and we should be announcing something soon that's gonna then further dilute that down. Yeah, we, I guess that's something that we should bring up in our presentations. I mean, our relationships with our tenants are fantastic. Yes, we would grow with almost all of them if we could.

Speaker #6: And we don't want to grow with the related party stuff that's been diminishing. And that's down to 46% of the portfolio. And we should be announcing something soon that's going to then further dilute that down.

Speaker #6: But yeah, we—I guess that's something that we don't really—we should bring up in our presentations. I mean, our relationships with our tenants are fantastic.

Speaker #6: And yes, we would grow with almost all of them, if we could. And I would add to that: 90% of our facilities are in master leases right now.

Jeffrey Bajtner: And I would add to that-

Moishe Gubin: I-

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

Speaker #6: And it's been—I mean, the best way to grow is just, once you have the—once the table's set with that master lease, it's just very easy to keep on adding facilities.

Speaker #6: As we've been doing that, as Mike said, in Oklahoma, Missouri, the past year, it's been very good to both us and the tenant.

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

Speaker #10: Okay. I appreciate all that detail. That's it for me. Thank you very much.

Speaker #6: Thank you, Tom.

Moishe Gubin: Thank you, John.

Jeffrey Bajtner: Thank you.

Speaker #3: Thank you.

Speaker #1: Thank you. Our next question, coming from the lineup: Mark Smith with Lake Street Capital Partners. Yolanda Smallpen.

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

Speaker #11: Hi, guys. Just wanted to go back a little bit about what you're seeing here for deals. Sounds like a lot of work in Q1, but some that just didn't get across the finish line.

Mark Smith: Hi, guys.

Moishe Gubin: Hey, Mark.

Mark Smith: a little bit about what you're seeing here for deals. You know, sounds like a lot of work in Q1, but you know, some that just didn't get across the finish line. You know, outside of competition, for some of these deals, is there anything else that's kind of changed or that's made it harder to close on some of these?

Speaker #11: Outside of competition for some of these deals, is there anything else that's kind of changed or that's made it harder to close on some of these?

Speaker #6: No. No, absolutely not. We don't have any issues with cash. We don't have any issues, regulatory-wise. I know there are some stories out there a little bit.

Moishe Gubin: No. No, absolutely not. We don't have any issues with cash. We don't have any issues, regulatory-wise. I know there's some stories out there a little bit, you know, Elizabeth Warren and a couple of others, you know, are on this, are on this issue about healthcare REITs owning nursing homes, but that really has been a lot of talk. I actually called both senators' offices to say, Hey, let me talk to you and explain it to you, and they didn't really have time or want to talk to me. That being said, there's no real, there's nothing blocking us from doing any deals other than, you know, the competitive of the price.

Speaker #6: Senator Warren and a couple of others are on this issue about healthcare REITs owning nursing homes. But that really has been a lot of talk.

Speaker #6: I actually called both senators' offices to say, 'Hey, let me talk to you and explain it to you.' And they didn't really have time or want to talk to me.

Speaker #6: But that being said, there's really nothing blocking us from doing any deals other than the competitiveness of the price. And if a deal doesn't underwrite, we remain very disciplined.

Moishe Gubin: If a deal doesn't underwrite, we remain very disciplined and we, you know, we're not looking to risk our portfolio, you know, on, you know, on just, what do they call that? A wish, whatever it is, a prayer and a wish, whatever it is, wish and a prayer. We're not looking to do any of that. We're looking to, you know, stuff that makes sense, that the math is there, continue with our process, and do things the way we do it. It's worked and should continue to work. It's just, you know, it was just a slow Q1 for us, unfortunately, as far as portfolio growth.

Speaker #6: And we're not looking to risk our portfolio on just—what do they call that? A wish, whatever it is, a prayer and a wish, whatever it is.

Speaker #6: Wish and a prayer. We're not looking to do any of that. We're looking to do stuff that makes sense, that the math is there, continue with our process, and do things the way we do it.

Speaker #6: And it's worked, and it should continue to work. It's just—it was just a slow first quarter for us, unfortunately, as far as portfolio growth.

Speaker #11: Okay. And then I just wanted to ask about, just, geographical expansion. I know we've talked about the Southeast and some other markets. It does sound like we'll likely see a new state added here soon.

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

Speaker #11: But it sounds like that's still in the Midwest. Just kind of curious—your appetite around more geographic expansion.

Speaker #6: Yeah, we got close on a couple of deals in Georgia, and if we found deals—which we haven't even seen any deals—in Alabama or Mississippi, that would be great.

Moishe Gubin: Yeah. We got close on a couple deals, Georgia, and, you know, if we found deals, which we haven't even seen any deals, Alabama, Mississippi would be great to get down to or South Carolina. Yeah, where the deals and where we're growing are both gonna be Midwest deals and the increases to our portfolio are most likely gonna be Texas, Oklahoma, maybe a little bit Tennessee. Always if we could find anything in Indiana. We've particularly not wanted to grow in Illinois for many years, because when we started, we were just top-heavy there and, you know, we wanna make sure that we have a diversified portfolio. So that's kind of our own, you know, internal control, as far as growing there.

Speaker #6: To get down to or South Carolina. But yeah, where the deals are and where we're growing are both going to be Midwest deals. And the increases to our portfolio are most likely going to be Texas, Oklahoma, maybe a little bit Tennessee, and always, if we could find anything, in Indiana.

Speaker #6: We’ve particularly not wanted to grow in Illinois for many years, because when we started, we were just top-heavy there. And we want to make sure that we have a diversified portfolio.

Speaker #6: So that's kind of our own internal control, as far as growing there. But yeah, no, I would love to grow in the next few years.

Moishe Gubin: Yeah, no, I would love to grow in the next few years. Certainly Iowa, if we can get a deal in Michigan, we looked at a deal in Michigan at one point. Wisconsin. Stick with that. Stick with that and see, and see where it goes.

Speaker #6: Certainly, Iowa. If we can get a deal in Michigan—we looked at a deal in Michigan at one point. Wisconsin. Stick with that. Stick with that and see where it goes.

Speaker #11: Okay. Great. Thank you, guys.

Mark Smith: Okay. Great. Thank you, guys.

Speaker #6: You're welcome. Thank you.

Moishe Gubin: You're welcome. Thank you.

Speaker #1: Thank you. Our next question, coming from the lineup: Ken Billingsley with Compass Point Research and Trading. Yolanda Smallpen.

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

Ken Billingsley: Thank you. Good afternoon.

Speaker #12: Thank you. Good afternoon.

Ken Billingsley: Thank you. Good afternoon.

Speaker #6: Hi, Ken.

Moishe Gubin: Hi, Ken.

Speaker #12: Thank you. Just wanted to follow up on just kind of the comments you were just making. So, on the competition, you have a big deal that you announced—likely is coming.

Operator: Thank you.

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

Speaker #12: Of the ones that you lost, what was—what kind of made them go with the competitors? Anything in specific? Anything that you're able to maybe manage in the future with some of these larger deals you're looking at?

Speaker #6: Yeah, it's actually an interesting thing. That deal—what made that difference and why we lost that deal—was that it was a broker deal, different than a lot of our deals.

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

Speaker #6: A lot of our deals, we know the sellers, and they specifically want to work with us. And they chase us down, and we work with them.

Speaker #6: And deals get made. The brokers, rightfully, are looking for top dollar, and they get more of a commission if it's a bigger deal. And that deal that we lost was a deal that we spent time working with the broker.

Speaker #6: And the brokers were very friendly with us. These are good people. But at the end of the day, until the ink is dry on those deals, when it's a broker-based deal, right, someone else could come in with a bigger dollar amount.

Moishe Gubin: You know, at the end of the day, you know, until the ink is dry, you know, on those deals when it's a broker-based deal, right, someone else could come in with a bigger dollar amount, and the broker calls the client and says, Hey, you know, you could probably still get out of your deal if you wanna go take a different deal. In that case, we didn't know the seller at all, and the seller took, you know, the last minute, this is, you know, 11:59 and 58 seconds and a much higher offer, and they took it. That is the only thing we could do differently there is somehow earlier in the process get to know the sellers.

Speaker #6: And the broker calls the client and says, 'Hey, you could probably still get out of your deal if you want to go take a different deal.' And in that case, we didn't know the seller at all.

Speaker #6: And the seller took the last-minute, 'This is 11:59 and 58 seconds.' And a much higher offer. And they took it. And that's the only thing we could do differently there, is somehow earlier in the process get to know the sellers.

Speaker #6: But in our world, the sellers that we buy from, or sellers that we've known for 20 years or 10 years, we're known in the industry.

Moishe Gubin: In our world, the sellers that we buy from are sellers that we've known for 20 years or 10 years, you know, we're known in the industry. We go to all the events. We spend a lot of time talking to people. I don't know if we could've done anything different there, you know, other than give a little guilt trip to the broker saying, you know, you gotta, you gotta be a little nicer and not pull a deal away from us in the last minute. I don't think we could've done anything differently there.

Speaker #6: We go to all the events. We spend a lot of time talking to people. And so, I don't know if we could have done anything different there.

Speaker #6: Other than give a little guilt trip to the broker, saying, "You got to be a little nicer and not pull a deal away from us at the list in the last minute." But I don't think we could have done anything differently there.

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

Speaker #12: Do you have a sense of what the cap rate went out at on that deal?

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

Speaker #6: Yeah, that's actually the, I guess, not the saving grace or whatever, is that in theory, our portfolio is way undervalued. Because if everything were traded at the 8.5 cap that someone else is willing to buy these things at, if you repriced my whole portfolio at an 8.5 cap, you'd say that I have another couple hundred million dollars of equity.

Moishe Gubin: Yeah, you know, that's actually the saving grace or whatever, is that in theory, our portfolio is way undervalued. Because if everything were traded at the 8.5 cap that someone else is willing to buy these things at, if you reprice my whole portfolio at 8.5 cap, you'd say that I have another $200 million of equity. Yeah, no, I think it traded at an 8.5 cap.

Speaker #6: So, yeah, no, I think it traded at an 8.5 cap.

Speaker #12: Wow. Okay. Last question I have is, on the about $255 million that's maturing through the remainder of this year, how much of this is going to be refinanced with the Israeli bond tranches that you mentioned versus the $300 million in financing?

Ken Billingsley: Wow, okay. Last question I have is on the about $255 million that's maturing, through the remainder of this year, how much of this is gonna be refinanced with the Israeli bond tranches that you mentioned versus the $300 million in financing?

Moishe Gubin: You know, if I commit to the one thing, the pricing is gonna go up. I don't really wanna answer that, you know. I would say that from my point of view, my primary desire would be two Israeli bonds to replace the three Israeli bonds. I would do the bond we're doing next week, God willing, and then, you know, assuming I mean, the last two bonds we did, we were oversubscribed by, like, 50%. Assuming we have the same oversubscription and people want it, we would probably take, you know, we would probably take the most we can take and then pay down, early, one of the other, you know, bond debts.

Speaker #6: If I commit to one thing, the pricing is going to go up. So I don't really want to answer that. But I would say that from my point of view, my primary desire would be two Israeli bonds to replace the three Israeli bonds.

Speaker #6: So I would do the bond we're doing next week, God willing, and then, assuming—I mean, the last two bonds we did, we were oversubscribed by like 50%.

Speaker #6: So, assuming we have the same oversubscription and people want it, we would probably take the most we can take, and then pay down early one of the other bond debts.

Speaker #6: So what that does for us is that it locks in our currency for four or five years, which is a hedge. If we look at today, the dollar versus the shekel, the shekel is strong.

Moishe Gubin: What that does for us is that it locks in our currency for 4 or 5 years, which is a hedge. You know, if we Today, the dollar versus the shekel, the shekel's strong. We have built into our financial statements a sizable allowance for currency. I don't wanna realize that. If we kick the can down the road, you know, 4 or 5 years on the currency, then I don't have to realize a loss that we've already expensed. It's OCI, so no one looks at it, but nevertheless, it's there. My desire is most likely to go to the Israeli market, assuming they want, you know, to that they're gonna stay competitive on the pricing, which they should.

Speaker #6: So we have built-in power financial statements. A sizable allowance for currency. And I don't want to realize that. So if we kick the can down the road four or five years on the currency, then I don't have to realize a loss that we've already expensed.

Speaker #6: It's OCI, so no one looks at it. But nevertheless, it's there. So my desire is most likely to go to the Israeli market, assuming they want to, that they're going to stay competitive on the pricing, which they should.

Speaker #12: Okay. Because the follow-up on that was these—it looked like you have 25 to 50 basis points of spread improvement, depending on how you structured this.

Ken Billingsley: Okay. Because that, because The follow-up on that was these, it looked like you have 25, 50 basis points of spread improvement depending on how you structured this. Would that be fair?

Speaker #12: Would that be fair to assume?

Moishe Gubin: Yes

Ken Billingsley: to assume? Okay.

Speaker #6: Yes.

Speaker #12: Okay.

Speaker #6: Yes. Yes. Yes. We're going to go from—we're going to go from an average rate between the 9.1%, the 6.9%, and the 5.7%, which are the three tranches that have to get refinanced.

Moishe Gubin: Yes.

Ken Billingsley: Great.

Moishe Gubin: Yes. We're gonna go from an average rate between the 9.1%, 6.9%, and 5.7%, which are the three tranches that have to get refinanced. It'll end up all being at 6%, 6.75%, 6.85%. If we do the commercial loan, we end up being at, like, 6.4%, something like that, 6.4%, 6.5%. Either way, you're talking about an improvement of, you know, at least a half a point on, you know, on a couple hundred million dollars of debt.

Speaker #6: It'll end up all being at 6 and three-quarters, 6.85 if we do the commercial loan. We end up being at like 6.4, something like that, 6.4, 6.5.

Speaker #6: And either way, you're talking about an improvement of at least half a point on a couple hundred million dollars of debt.

Ken Billingsley: Leaving you with $150 million of dry powder when all is said and done.

Speaker #12: And then leaving you with $150 million of dry powder. But when all is said and done, with $150 million of dry powder to work.

Ken Billingsley: Leaving you with $150 million of dry powder when all is said and done.

Moishe Gubin: Yeah

Ken Billingsley: of dry powder to work with. Okay. Excellent.

Speaker #12: Okay. Excellent.

Moishe Gubin: Yeah. 150, 140. Yeah, 100%.

Speaker #6: Yeah. 150, 140. Yeah. 100%.

Speaker #12: Excellent. Thank you for taking my question.

Ken Billingsley: Excellent. Thank you for taking my question.

Speaker #6: I think it's a good spot. I think it's a good spot to be in at the end of the day.

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

Ken Billingsley: Agreed.

Speaker #12: Agreed.

Speaker #1: Thank you. And I'm not showing any further questions in the Q&A with you at this time. I will now turn the call back over to Jeff for any closing comments.

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

Jeffrey Bajtner: No. Thank you so much. Thank you everyone for joining us. It's always a pleasure hearing everybody's questions. If you have any further questions, please feel free to reach out to Maj, myself, or Greg. I'd also like to further add, if anyone is interested in listening to the recording from yesterday's annual shareholder meeting, it's up on our website, strawberryfieldsreit.com. Once again, thank you, and have a wonderful weekend.

Speaker #6: No, thank you so much. Thank you, everyone, for joining us. It's always a pleasure hearing everybody's questions. If you have any further questions, please feel free to reach out to Mish, myself, or Greg.

Speaker #6: I'd also like to further add, if anyone is interested in listening to the recording from yesterday's annual shareholder meeting, it's up on our website, strawberryfieldsreit.com.

Speaker #6: And once again, thank you. And have a wonderful weekend.

Speaker #1: This concludes today's conference call. Thank you.

Operator: This concludes today's conference call. Thank you.

Moishe Gubin: Thank you.

Speaker #12: Thank you.

Operator: for your participation.