Q2 2026 Strawberry Fields Reit Inc Earnings Call

August 7, 2026

Operator: Good day. Thank you for standing by. Welcome to the Strawberry Fields REIT Q2 2026 Earnings Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, Geffen Feit, Chief Investment Officer.

Speaker #2: Good day, and thank you for standing by. Welcome to the Strawberry Fields REIT Q2 2026 earnings call. At this time, all participants are in a listen-only mode.

Speaker #2: Please be advised that today's conference is being recorded. After the speakers' presentations, there will be a question-and-answer session. To ask a question, please press *11 on your telephone and wait for your name to be announced.

Speaker #2: To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, Jeff Beitner, Chief Investment Officer.

Speaker #3: Welcome. Also joining us is Greg Flanian, our CFO. Yesterday evening, the company issued its Q2 2026 earnings results, which are available on the company's investor relations website.

Geffen Feit: Greg Flamion, our CFO. Yesterday evening, the company issued its Q2 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 beyond its control. Additionally, references will be made during this call to non-GAAP financial results.

Speaker #3: 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 #3: These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, and financings. They may or may not reference other matters affecting the company's business or the businesses of its tenants, including factors that are beyond its control.

Speaker #3: Additionally, references will be made during this call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures, as well as explanations and reconciliations of these measures to the comparable GAAP results, included on the non-GAAP measure reconciliation pages at the back of our investor presentation.

Geffen Feit: 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 pages at the back of our investor presentation. Now on to discussing Strawberry Fields REIT and our Q2 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. On 18 June 2026, the company closed on its corporate credit facility with availability up to $300 million. The credit facility is comprised of a $100 million term loan initial three-year terms and two one-year options. Proceeds from the credit facility was used to refinance existing secured bank debt, and the remaining drew will be available to support acquisition mode. SOFR 275.

Speaker #3: And now, on to discussing Strawberry Fields REIT in our Q2 2026 performance. I wanted to start by sharing some key highlights for the quarter.

Speaker #3: During the quarter, the company collected 100% of its contractual rents. On June 18, the company closed on its corporate credit facility with availability of up to $300 million.

Speaker #3: The credit facility is comprised of a $100 million term loan and a $200 million revolving line of credit, capping initial three-year terms and two one-year expansion options.

Speaker #3: The proceeds from the credit facility were used to refinance existing secured bank debt, and the remainder will be available to support acquisition growth. The credit facility is over $275 million.

Speaker #3: On April 21, the company entered into a contract for the acquisition of a hospital campus comprised of a licensed 60-bed hospital, a licensed 99-bed skilled nursing facility, and ancillary medical office buildings near Kansas City, Missouri.

Geffen Feit: On 21 April, the company entered into a contract for the acquisition of a hospital campus comprised of a licensed 60-bed hospital, licensed 99-bed skilled nursing facility, and ancillary medical office buildings near Kansas City, Missouri. The purchase price will be $10.4 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 annual base rents of $1.04 million and subject to 3% annual rent increases. The company expects to close on this acquisition during Q3. Deal-wise, we have been very busy looking at deals in existing and new states. After a little bit of a lull, beginning with the above-mentioned hospital, it seems that deals are starting to make sense again, we are hopeful that Q4 is going to be a busy quarter closing some of these deals.

Speaker #3: The purchase price will be $10.4 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 annual base rents of $1.04 million, and subject to 3% annual rent increases.

Speaker #3: The company expects to close on this acquisition during Q3. DOIs, we have been very busy looking at deals in existing and new states. After a little bit of a lull, beginning with the above-mentioned hospital, it seems that deals are starting to make sense again.

Speaker #3: And we are hopeful that Q4 is going to be a busy quarter, closing some of these deals. Yesterday, the board of directors approved the Q3 2026 dividend, which will be $0.17 a share.

Geffen Feit: Yesterday, the board of directors approved the Q3 2026 dividend, which will be $0.17 a share. The dividend will be paid on 30 September to shareholders of record on 16 September. I would now like to have Greg Flamion, our Chief Financial Officer, discuss the quarter-end financials.

Speaker #3: The dividend will be paid on September 30 to shareholders of record on September 16. I would now like to have Greg Flanian, our Chief Financial Officer, discuss the quarter-end financials.

Speaker #4: Thank you, Jeff. And welcome, everyone, to the Strawberry Fields second quarter earnings call. Let's begin with a look at our balance sheet. Total assets are 87 878.5 million dollars, an increase of 18.8 from 2.1% compared to June 30, 2025.

Greg Flamion: Thank you, Geoff, welcome everyone to the Strawberry Fields second quarter earnings call. Let's begin with a look at our balance sheet. Total assets are $878.5 million, an increase of 18.8 or 2.1% compared to 30 June 2025. The year-over-year decline in assets is driven by an elevated cash balances at the end of the Q2 2025. These funds were used to acquire properties later in that fiscal year. On the liability side, higher debt balances were driven by financing associated with our acquisitions, together with foreign currency translation effects. Equity was lower year-over-year, primarily due to the decline in accumulated other comprehensive income related to foreign currency translation adjustments. Continuing now with the consolidated statement of income for the six months ended July 2026. 2026 revenue was $80 million, up $4.8 million compared to 30 June 2025.

Speaker #4: The year-over-year decline in assets is driven by elevated cash balances at the end of the second quarter of 2025. These funds were used to acquire properties later in that fiscal year.

Speaker #4: On the liability side, higher debt balances were driven by financing associated with our acquisitions, together with foreign currency translation effects. Equity was lower year over year, primarily due to the decline in accumulated other comprehensive income related to foreign currency translation adjustments.

Speaker #4: Continuing now with the consolidated statement of income for the six months ended July 2026. 2026 revenue was $80 million, up $4.8 million compared to June 30, 2025.

Speaker #4: This represents a 6.4% 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, which was driven by the new property acquisitions.

Greg Flamion: This represents a 6.4% 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, which was driven by the new property acquisitions. General and administrative expenses were also higher due to higher closing costs, corporate salaries, and other operating expenses. These increases were offset by lower amortization. The result in a year-to-date income of $18.4 million, or $0.33 a share, compared to 15.7 or $0.29 a share for the six months ended Q2 2025. Going to the next slide, we're now going to look at a quarterly income statement comparison of Q2 2026 to Q2 2025. The Q2 revenues were $40 million, which is $2.2 million higher than Q2 2025. Quarterly increases were driven by higher G&A expenses.

Speaker #4: General and administrative expenses were also higher due to higher closing costs, corporate salaries, and other operating expenses. These increases were offset by lower amortization.

Speaker #4: The results in a year-to-date income of 18.4 million dollars, or 33 cents a share compared to 15.7, or 29 cents a share for the six-month ended Q2, 2025.

Speaker #4: Going to the next slide, we are now going to look at a quarterly income statement comparison of Q2 2026 to Q2 2025. Second quarter revenues were $40 million, which is $2.2 million higher than Q2 2025.

Speaker #4: Expenses were mostly in line. However, quarterly increases were driven by higher G&A expenses. Q2 net income was $8.9 million, which is marginally higher than the net income from the prior year quarter.

Greg Flamion: Q2 net income was $8.9 million, which is marginally higher than the net income from the prior year quarter. Finally, I'd like to end my presentation with some financial highlights. Our 2026 AFFO is $73.9 million, representing an 11% compound annual growth rate. The 2026 projected AFFO per share growth is 10.1%. The 2026 adjusted EBITDA is $135.7 million, representing a 15% compound annual growth rate. Our yield on leases is 14.4%. The company's net debt to net asset ratio currently sits at 49.8%, and as of 30 June 2026, our dividend is $0.07 a share, representing a 4.9% yield and an AFFO payout of 50.6%. This concludes the financial portion of the earnings call presentation. I'll now turn it back over to Jeff Bajtner, who will walk us through additional portfolio highlights.

Speaker #4: Finally, I'd like to end my presentation with some financial highlights. Our 2026 AFFO is $73.9 million, representing an 11% compound annual growth rate.

Speaker #4: The 2026 projected AFFO per share growth is 10.1%. The 2026 adjusted EBITDA is $135.7 million, representing a 50% compound annual growth rate.

Speaker #4: Our yield on leases is 14.4%. The company's net debt to net asset ratio currently sits at 49.8%. As of June 30, 2026, our dividend is $0.70 per share, representing a 4.9% yield and an AFFO payout of 50.6%.

Speaker #4: This concludes the financial portion of the earnings call presentation. I'll now turn it back over to Jeff Weitner, who will walk us through additional portfolio highlights.

Speaker #3: Thank you, Greg. Looking at the portfolio highlights, currently our portfolio has 142 facilities located in 10 states. In these facilities, we have 15,000 to 496 licensed beds.

Geffen Feit: Thank you, Greg Flamion. Looking at the portfolio highlights, currently our portfolio has 142 facilities located in 10 states. In these facilities, we have 15,496 licensed beds. The total property value of our portfolio is in excess of $1.4 billion. This amount is calculated by taking our annualized base rents of $143 million and multiplying it by a conservative cap rate of 10%. With the current healthcare real estate market being very strong and looking at comps, we believe that our portfolio should be valued at a lower cap rate than a 10%. Included in our most recent investor deck that we filed yesterday and is on the company's website, there is a sensitivity table at the back showing that as the cap rates go down, the values go up. Currently, our portfolio has 16 consultants advising operators. The remaining average lease term of the portfolio is 6.9 years.

Speaker #3: The total property value of our portfolio is in excess of $1.4 billion. This amount is calculated by taking our annualized base rents of $143 million and multiplying it by a conservative cap rate of 10%.

Speaker #3: With the current healthcare real estate market being very strong and looking at comps, we believe that our portfolio should be valued at a lower cap rate than a 10%.

Speaker #3: Included in our most recent investor deck that we filed yesterday that is that we filed yesterday and is on the company's website, there's there is a sensitivity table at the back showing that as the cap rates go down, the values go up.

Speaker #3: Currently, our portfolio has 16 properties. The remaining average lease term of the portfolio is 6.9 years. We are pleased to report that our tenants continue to do well, and the EBITDA on rent coverage for May 31 is 2.17.

Geffen Feit: We are pleased to report that our tenants continue to do well and the EBITDA on rent coverage for 31 May is 2.17. The net debt to adjusted EBITDA is 5.7. We've continued to collect 100% of our rents. As a final point, as I mentioned earlier, our pipeline remains strong and we're seeing deals in existing states and new states, and currently we're looking at deals in excess of $225 million. With that, I'd like to hand it over to Moishe Gubin, our Chairman and CEO, to continue the presentation.

Speaker #3: The net debt to adjusted EBITDA is 5.7. We've continued to collect 100% of our rents, and as a final point, as I mentioned earlier, our pipeline remains strong and we're seeing deals in existing states and new states, and currently we're looking at deals in excess of 225 million dollars.

Speaker #3: And with that, I'd like to hand it over to Maish Gubin, our Chairman and CEO, to continue the presentation.

Speaker #5: All right. Thank you, Jeff. As Jeff and Greg already alluded to, we had a pretty quiet quarter. And so the slides I'm going to go through are just giving you basically the graphs and a couple other pieces of information.

Moishe Gubin: All right. Thank you, Jeff Bajtner. As Jeff Bajtner and Greg Flamion already alluded to, we had a pretty quiet quarter. The slides I'm going to go through are just giving you basically the graphs and a couple other pieces of information. The first slide shows you our AFFO growth for the last five years or five and a half years. Again, it's an 11% growth rate. Beautiful, from $44 million to almost $74 million. Again, this will change. Hopefully, we'll end the year hitting our targets, just hitting the targets towards the end of the year instead of the beginning of the year, which is what we wanted. Unfortunately, it's just how it goes. This year is a quieter year. Like Jeff Bajtner said, we're collecting all our rents still and bringing in the money and we're making a good living. That's this slide.

Speaker #5: So, the first slide shows you our AFFO growth for the last five years, or five and a half years. And again, it's an 11% growth rate.

Speaker #5: Beautiful from 44 million to almost 74 million dollars. Again, this will this will this will change hopefully we'll have a nice nice we'll end the year hitting our targets just hitting the targets towards the end of the year instead of the beginning of the year, which is what we wanted.

Speaker #5: Unfortunately, it's just how it goes. And so, this year is a quieter year. Like Jeff said, we are already collecting all our rents still and bringing in the money, and we're making a good living.

Speaker #5: So so that's that's this slide. On the next slide, we talk about the portfolio growth. We've changed this slide to try to show a straight line at a 10 cap, to try to show what what the values are so you see we're sitting at the other slide of how we had this previously, we're just showing you historical cost.

Moishe Gubin: On the next slide, we talk about the portfolio growth. We changed this slide to try to show a straight line at 10 cap to try to show what the values are. You see the other slide of how we had this previously was just showing you historical costs. Now this is showing you basically market value or 10 cap value on our rents that we're collecting. These are lease fee appraisals. So about a 13% growth rate here from 2021, having a value of about $777 million to now $14 and a quarter million. The next slide just talks about our stock price over the last 12 months. Seems to be this quarter we ended off good. Currently, our stock price is performing better than this, which is good. As things continue, we expect to get closer to our peers as far as valuation.

Speaker #5: Now this is showing you basically market value or a 10 cap value on our rents that we're collecting. These are lease fee appraisals. So about a 13% growth rate here.

Speaker #5: From 2021, having a value of about $777 million, to now $14.25 million. The next slide just talks about our stock price over the last 12 months.

Speaker #5: Seems to be that quarter this quarter we ended off good. Currently, our stock price is performing better than this, which is good. And as as as things continue, we expect to get closer to our peers as far as valuation.

Speaker #5: On our next slide, we talk about our valuation gap, which we're hoping to continue to close in on and catch up to our peers.

Moishe Gubin: On our next slide, we talk about our valuation gap, which we're hoping to continue to close in on and catch up to our peers. We're still trading at a 40% discount to our peer average AFFO multiple at 10 and a half. We feel that we should be able to catch up hopefully sooner than later. We're pushing, having good results quarter in, quarter out, dividend that's reliable. Going to all these conferences, meeting a lot of people. Again, we're sticking with the fact that we're the most SNF-focused portfolio with almost 92% of our portfolio being nursing homes. We have a very quick, very fast AFFO share growth, which is beating all of our peers at around 11%. We have the lowest payout ratio, dividend payout ratio at right around 50%.

Speaker #5: We're still trading at a 40% discount to our peer average AFFO multiple, at 10.5. We feel that we should be able to catch up.

Speaker #5: Hopefully sooner than later. We're pushing, having good results quarter in and quarter out, a dividend that's reliable, going to all these conferences, meeting a lot of people.

Speaker #5: Again, we're we're stick we're sticking with the fact that we're the most SNF-focused portfolio with almost 92% of our portfolio being nursing homes. We have a very quick a very fast AFFO share growth, which is beating all of our peers.

Speaker #5: At, you know, around 11%. And we have the lowest dividend payout ratio, at right around 50%. We feel all these things should catch up, and we'll be more in line, hopefully sooner rather than later.

Moishe Gubin: We feel all these things should catch up, we'll be more in line, hopefully sooner than later. On the next slide, if you just look at our market performance over the last year, our stock actually has held its own, we're proud of that. We expect for it to continue on the rise. Right now, we're still collecting 100% of our rents, which Jeff said earlier. Our metrics are all good. A slow growth year, hopefully it doesn't affect us to the marketplace. Actually, I'm a little embarrassed by it, even though I keep bringing it up on this call. That being said, we expect things to just keep continuing what we're doing, hopefully, the stock will vindicate us and show us in a good light. On the next slide, again, we've talked about this already.

Speaker #5: On the next slide, we just look at our market performance over the last year. Our stock has actually held its own, and we're proud of that.

Speaker #5: And we could—we expect for it to continue on a rise. I don't think there shouldn't be. Right now, we're still collecting 100% of our rents, which Jeff said earlier.

Speaker #5: You know, our metrics are all good. It's been a slow growth year. Hopefully, it doesn't affect us in the marketplace. Actually, I'm a little embarrassed by it, even though I keep bringing it up on this call.

Speaker #5: But that being said, we expect things to just keep continuing as we’re doing. And hopefully the stock will vindicate us and show—show next slide. Again, we talked about this already.

Speaker #5: You know, this is this is how big of a difference we have. We're at 91 and a half percent. And these are I think it's good for us because somebody who recognizes the value of of of the baby boomers and the and the and the value of the need for SNF care in America and how you can rely on the return.

Moishe Gubin: This is how big of a difference we have. We're at 91.5%, the SNFs. These are very conservative now. We're now lower than our distribution, which is very safe and fine. Really, I think it's good for us because somebody who recognizes the value of the baby boomers and the value of the need for SNF care in America and how you could rely on the return. It's not erratic. It's not based on performance of the operations. They pay us our rent, which is absolute. With that, I think in the long run, the shareholders or the marketplace should flock to us knowing full well that we're going to continue to have a slow and steady return that you could rely on. On the next slide, peer comparison. Again, just to show how we compare.

Speaker #5: There's no it's not erratic. It's not based on, you know, performance of the operations. They pay us our rent, which is absolute. So with that, I think I think in the long run, the shareholders or the marketplace should should should flock to us knowing knowing full well that we're going to, you know, continue to have a steady slow and steady return that you can rely on.

Speaker #5: On the next slide, peer comparison. Again, just to show how we compare. Again, 50% payout ratio. And then you have the largest distributing 87% of their cash.

Moishe Gubin: Again, 50% payout ratio, then you have the largest is distributing 87% of their cash. That means for every time they want to buy stuff, they have to sell more equity, which dilutes the shareholders and their share of the profits. That's a hard way to go. In our case, everything we're doing is accretive, and even though we do sell stock in the ATM or we continue to extend our shareholder base, we're still mainly using cash from our balance sheet to grow, then we're able to add debt to stay at a 50% leverage ratio for us to be able to meet what our payout ratio continues to be. On the other slide to the right of that is our growth rate. Again, just basically because of that simple math.

Speaker #5: And so that means every time they want to buy stuff, right, they have to sell more equity, which dilutes the shareholders and their share of the profits.

Speaker #5: And that's a hard way to go. In our case, everything we're doing is accretive. And even though we do sell stock in the ETM or we you know, we continue to to extend our shareholder base, we're still we're we're still mainly using cash from our balance sheet to grow.

Speaker #5: And then we're able to add debt to stay at a 50% leverage ratio. For us to be able to for us to be able to meet what our payout ratio continues to be.

Speaker #5: And then, on the other slide to the right of that, is our growth rate. And again, it's just basically because of that simple math.

Speaker #5: Since we're using our own cash and we're not selling more equity to be able to grow the portfolio, that means we have AFFO per share growth, because each share is earning more and more money every year.

Moishe Gubin: Since we're using our own cash and we're not selling more equity to be able to grow the portfolio, that makes it that we have AFFO share growth because each share is earning more and more money every year, as opposed to having more shares, earning more money as a group, but having more shares to share it with. That's the math, and we're proud of that. On the next slide, we just reiterate the total return. When you take the growth of the AFFO per share over the last, if you include 2026 whole year as a projection, it's a 10% growth rate. You take that together with the 5% dividend yield. You're at a 16% total return, the math is really, really simple. You could see it in the chart here, $74 million of AFFO. We paid half of it, the remaining amount of money.

Speaker #5: As opposed to having more shares earning more money as a group, but having more shares to share it with. So that's—that's the math.

Speaker #5: And we're proud of that. On the next slide, we just reiterate the total return. When you take the growth of the AFFO per share over the last, you know, if you include 2026 whole year as a projection, it's a 10% growth rate.

Speaker #5: You take that together with the 5% dividend yield, right, you're at a—you’re at a—you're at a 16% total return. And the math is really, really simple.

Speaker #5: You know, you can see it in the chart here: $74 million of AFFO. We’ve had half of it. The remaining amount of money, we take that, we buy—we buy more assets.

Moishe Gubin: We take that, we buy more assets, that gives us the return. The next slide just talks about our debt structure. This ended up being the year of the debt restructure because we're spending all of our time even though we're looking at deals, and it's been a weird year as far as how the deals come. They came, they went. We have deals that we contract with. They broke the contract, we get back into contract. We never had a year like this where we had that kind of erratic nature, it's just random. It's not like you can't read into it to say, Well, something changed in the marketplace. It's just the way this year played out. We'll still hit our bogey as far as closing between $100, 150 million of deals.

Speaker #5: And that gives us the return. The next slide just talks about our debt structure. This ended up being the year of the debt restructure because we're spending all of our time, even though we're looking at deals, and it's been a weird year as far as how the deals come.

Speaker #5: They came, they went. They came, they went. We have deals that we were in contract with. They broke the contract, then we got back into contract.

Speaker #5: This we never had a year like this where where we had that kind of erratic nature in and and it's just random. It's not it's not like you can't read into it to say, well, something changed in the marketplace.

Speaker #5: It's just the way this year played out. We'll still hit our bogey as far as closing between $100 and $150 million of deals.

Speaker #5: Just that instead of being at the beginning of the year and reflecting in our numbers for the year, it's going to end up being towards the end of the year, and so next year will be a solid year.

Moishe Gubin: Just that instead of being at the beginning of the year and reflecting in our numbers for the year, it's going to end up being towards the end of the year, next year will be a solid year. This year is also a solid year, just not a growth year from that point of view. We spent a lot of time on debt. Like Jeff and Greg mentioned earlier in the year, we refinanced, subsequent to quarter end, we've actually paid off one of our bonds. We used cash from the balance sheet. We raised a little bit of money in May, now we have in our line of credit, which has $140 million of availability on it right now. We still have some debt maturing in September.

Speaker #5: And this year is also a solid year, just not a growth year from that point of view. But we spent a lot of time on debt.

Speaker #5: Like Jeff and Greg mentioned earlier, earlier in the year we refinanced, and subsequent to quarter end, we've actually paid off one of our bonds.

Speaker #5: We used cash from the balance sheet. We raised a little bit of money in May. And now we have a line of credit, which has $140 million of availability on it right now.

Speaker #5: We still have some debt maturing in in September. We're going to take a road road road trip to Israel. And by the time we get back from Israel, or shortly thereafter, somehow we'll have the bonds paid off.

Moishe Gubin: We're going to take a road trip to Israel, by the time we get back from Israel or shortly thereafter, somehow we'll have the bonds paid off. Without adding to our debt load as far as 50% leverage. We're right about 50% or a little bit below 50%. We should be able to get everything done, then we don't have to worry about any bonds or any real financing that's maturing for a bit. This slide is actually real nice. I like it. I look forward until Q3 when we change this slide around. It's actually going to be nice and smooth across a few years. This slide is pretty self-explanatory of blended interest rate below 6%. 20-year-plus HUD debt maturity, below 50% leverage, like we said, and 5.7x net debt to EBITDA.

Speaker #5: And with that adding to our debt load, as far as, you know, 50% leverage—we're right now right about, right about 50%, or a little bit below 50%.

Speaker #5: So we should be able to get everything done and then and then we don't have to worry about any bond or any real you know, financing that's that's maturing you know, for for a bit.

Speaker #5: So this slide is actually real nice. I like it. I want I look forward till third quarter is when we change this slide around.

Speaker #5: It's actually going to be nice and smooth across a few years. And so, this slide is pretty self-explanatory with the blended interest rate below 6%, and a 20-year plus HUD debt maturity.

Speaker #5: Below 50% leverage, like we said, and 5.7 times net debt to EBITDA. The corporate bonds, like I said, we paid off Bond C.

Moishe Gubin: The corporate bonds, like I said, we paid off Bond C. We now have A and D that are going to get paid off in Q3. We redid our line of credit, which we talked about. That bank debt basically turns into one loan. That's a 5-year loan, is really a 3-year with two 1-year renewals. We still basically have one regular conventional loan at 6% at a small bank in Tennessee. God bless them. On the next slide, we talk about the diversity of our portfolio. That hasn't really changed from last quarter. You see also the base rent by related consultants. Again, we're pretty diversified. We don't really have too much exposure or concentration in any one place except for Indiana, which is our best state, so that's positive.

Speaker #5: We now have A and D that are going to get paid off in the third quarter. We redid our line of credit, which we talked about.

Speaker #5: So that bank debt basically turns into one loan. That's a 5-year loan. It was really a 3-year, with two 1-year renewals. And we still basically have one regular conventional loan at about 6% from a small bank in Tennessee.

Speaker #5: God bless them. On the next slide, we talk about the diversity of our portfolio. That hasn't really changed from last quarter. And you see also the base rent by related consultants.

Speaker #5: Again, we're pretty diversified. We don't really have too much exposure or concentration in any one place except for Indiana, which is our best state.

Speaker #5: So that's positive. And we expect we expect before the year's out to add at least one more state, hopefully, to our to our mix.

Moishe Gubin: We expect, before the year's out, to add at least one more state, hopefully, to our mix. One of the deals that's hopefully going to close Q3 or Q4 is a pretty sizable deal in a new state, which is good. All right. On the next slide, this is the Richard Anderson slide, which he's the only reason for this slide to be in this presentation. God bless him. The occupancy for the facilities, right around 77%, which is high, but again, it doesn't really matter to me. Our tenants, we look at their financials, and they're an efficiency business, so sometimes a lower occupancy will make them more money than a higher occupancy. It's contribution margins, if any of you remember from accounting school. That being said, it's a metric worth telling the folks. Average facility size of 108, and they're running 83 out of 108.

Speaker #5: One of the deals that's hopefully going to close in the third or fourth quarter is a pretty sizable deal in our new state, which is good.

Speaker #5: All right. On the next slide—this is the Rich Anderson slide—which really, he's the only reason for this slide to be in this presentation.

Speaker #5: God bless him. The occupancy for the facilities is right around 77%, which is a high. But again, it doesn't really matter to me. You know, our tenants—we look at their financials, and they're an efficiency business.

Speaker #5: So sometimes a lower occupancy will make them more money than a higher occupancy. It's contribution margins, if any of you remember from accounting school.

Speaker #5: That being said, it's a metric we're telling the folks. Average facility size of 108, and they're running 83 out of 108. Like most facilities in America, the majority of the facilities are being paid for by Medicaid.

Moishe Gubin: Like most facilities in America, majority of the facility is being paid for by Medicaid, then everything else is between Medicare, private pay insurance, and hospice care, which usually falls under Medicaid or private as well. On the next slide, just shows you our map. That hasn't changed from quarter to quarter. I'm happy when we add the new state. It won't fill in the middle, but it'll grow our perimeter of the current operators. Again, pure play, we talked about it, around 92% of our portfolio is nursing homes. Again, we've maintained exactly the way we buy things year in, year out. That hasn't changed. Most of you that are listening to this call probably already know it. We buy everything to a 10 cap. Once we get a 10 cap, it's a 10-year lease with two 5-year renewals, 3% annual increases for most of our portfolio.

Speaker #5: And then everything else is between Medicare, private pay insurance, and hospice care, which usually falls under Medicaid or private as well. On the next slide, it just shows you our map.

Speaker #5: That hasn't changed from quarter to quarter. We will be, I'm happy, when we add the new state. It won't fill in the middle, but it will grow our perimeter of, of, of the current, the current operators.

Speaker #5: Again, pure play. We talked about it. Less than 92—right around 92% of our portfolio is nursing homes. And again, we've maintained exactly the way we buy things, year in, year out.

Speaker #5: That hasn't changed. Most of you that are listening to this call probably already know it. We buy everything to a 10 cap. We we we start with at the once we do a 10 cap, it's a 10-year lease, a 25-year renewals.

Speaker #5: 3% annual increases for most of our portfolio. And again, we have a projected ROE of 12%. What that's basically considering is keeping 50% leverage, and then paying interest on the other half and earning a 10 cap.

Moishe Gubin: Again, we have a projected ROE of 12%. With that's basically considering keeping 50% leverage and then paying interest on the other half and earning a 10 cap, so it gives us a little bit more yield. We love the master lease structure, so we continue to buy. I think right now we're buying hopefully something in Tennessee that's going to add to a master lease, buying something in Missouri that's going to add to a master lease, then a new deal, which are multiple facilities under a master lease. That's how we've done it historically, and that's how we continue to do it. Most likely, that's how we're going to do it going forward as well. Okay. With that ends my comments and my remarks on this presentation. Thank you all for joining us.

Speaker #5: So it gives us a little bit more yield. We typically love the master lease. We love the master lease structure, and so we continue to buy. I think right now we're buying—hopefully—something in Tennessee that's going to add to a master lease, and buying something in Missouri that's going to add to a master lease.

Speaker #5: And then and then a new deal, which is multiple facilities under a master lease. And that's and that's that's how we've done it historically.

Speaker #5: And that's how we continue to do it. Most likely, that's how we're going to do it going forward as well. Okay. With that, that ends my comments.

Speaker #5: And those are my remarks on the presentation. Thank you all for joining us. We will now turn it over to the operator for any questions and answers anyone has.

Moishe Gubin: We will now turn it over to the operator for any questions and answers anyone has, and we'll be glad to provide.

Speaker #5: And we'll be glad to provide.

Speaker #1: Thank you. As a reminder, to ask a question, please press star one-one on your telephone and wait for your name to be announced. To withdraw your question, please press star one-one again.

Operator: Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. One moment for questions. Our first question comes from Richard Anderson with Cantor Fitzgerald. You may proceed.

Speaker #1: One moment for questions. And our first question comes from Richard Anderson with Canterbridge Gerald. You may proceed.

Richard Anderson: Hey, thanks. I'm honored to have my own slide, thank you for that. When you think about It kind of looked like you're projecting AFFO of $1.33 for this year. To what degree does that take into account any activity that you might close for the H2 of this year, if at all? Or is it because it'd be closing so late that it probably doesn't have much of an impact on the numbers?

Speaker #3: Hey. Thanks. And I'm honored to have my own slide. So thank you for that. So when you think about kind of you look like you're projecting AFFO of $1.33 for this year.

Speaker #3: To what degree does that take into account any activity that you might close for the back half of this year, if at all? Or is it because it would be closing so late that it probably doesn't have much of an impact on the numbers?

Speaker #2: Well, typically I would answer this question, but Jeff, why don't you try to answer this question?

Moishe Gubin: Typically, I would answer this question. How about Jeff? Why don't you try to answer this question?

Speaker #4: On the $1.33 annualizing, our current FFO for the year, AFFO for the year, the acquisition in Missouri that we're going to be closing hopefully during this quarter should move it up incrementally.

Geffen Feit: The $1.33 is annualizing our current FFO for the year, AFFO for the year. The acquisition in Missouri that we're going to be closing, hopefully during this quarter, should move it up incrementally. Realistically, these new deals that we're looking at are going to be towards later in Q4, and I don't expect it to have the biggest effect on our AFFO per share.

Speaker #4: But realistically, these new deals that we're looking at are going to be towards later in Q4, and I don't expect it to have the biggest effect on our AFFO per share.

Speaker #2: I think I think Rich, if you were modeling if you're modeling out or any of the other analysts that are in modeling out, you should be modeling out for probably an AFFO of an additional $12 million or so.

Moishe Gubin: I think, Rich, if you're modeling out, or any of the other analysts that are modeling out, you should be modeling out for probably an AFFO of an additional $12 million or so. Maybe at $155 to 160 million for next year. Maybe a little higher than that. Jeff, that make sense to you? Greg? Yeah. $155 to 160 million.

Speaker #2: So maybe $155 to $160 for next year. Maybe a little higher than that. And Jeff, does that make sense to you? Greg? Yeah.

Speaker #4: Yeah. I mean, I think if you're going to—if everything we're working on were to come to fruition and work out, yes, that would make sense.

Geffen Feit: Jeff, I think if everything we're working on were to come to

Richard Anderson: To come to fruition and work out, yes, that would make sense.

Speaker #2: 155, 160 would be a top—would be top line, and the bottom line would be from 70, 74 and a half or so, to probably closer to 80, 82 or something like that.

Moishe Gubin: $1.516 would be top line, and the bottom line would be from 74 and a half or so to probably closer to 80, 82 or something like that. 81, 82.

Speaker #2: 81, 82.

Speaker #3: Okay, so there's a little potential life to that $1.33, based on whatever might happen in the back half of this year.

Richard Anderson: Okay. There's a little potential life to that $1.33 based on whatever might happen back half of this year.

Speaker #2: Yeah. Yeah. It's a drop. Yeah.

Moishe Gubin: Yes. Yeah. It's a drop.

Richard Anderson: Yeah. Okay, understood.

Speaker #3: Okay. Understood.

Speaker #2: It's a it's a it's a it's unfortunate the way the way this year has played out has been I've never I've never seen it in my in my I'm doing this now for 20 I started in 1998.

Moishe Gubin: It's unfortunate the way this year has played out. I'm doing this now for 20. I started in 1998. I never saw a year where. I blame all the good on God, so when something's like this where it's a little bit wonky, we blame that on God, too. That somehow, for whatever reason, just made it that, a deal happens, and a deal doesn't happen, and the same deal goes back three or four times, and now we think we're locked and loaded, hopefully, finally, and a couple other deals got signed up since then. Just a strange year.

Speaker #2: I never saw a year where where and and I'm just I'm I I blame all the good on God. So when when some things like this where where it's a little bit wonky, we blame that on God too.

Speaker #2: That, somehow, for whatever reason, just made it that, you know, a deal happens and a deal doesn't happen, and the same deal goes back three or four times, and now we think we're locked and loaded—hopefully.

Speaker #2: Finally. And a couple of other deals got signed up since then. Just a strange year. I don't know, no real reason.

Richard Anderson: Okay

Moishe Gubin: for no real reason.

Speaker #3: Okay. All right. Second question from me—you know, the KC deal that's going to close in the third quarter has a hospital element to it.

Richard Anderson: All right. Second question from me. The KC deal that is going to close in Q3 has a hospital element to it. I think we talked about this last quarter, but how open are you to sort of opportunities like that that are largely SNF but have some other stuff associated with them? Is that something that you feel adds to the risk profile of the investment? Any kind of color you can provide around investment opportunities that have a little bit more of a diversified component to them.

Speaker #3: I think we kind of talked about this last quarter, but how open are you to opportunities like that that are, you know, are largely SNF, but have some other stuff associated with them?

Speaker #3: Is that a, you know, something that do you feel is, you know, adds to the risk profile of the investment? Anything any kind of color you can provide around something that, you know, investment opportunities that have a little bit more of a diversified component to them?

Speaker #2: Well, the the starting point is for every deal we look at, there has to be a reasonable, you know, sense on who's going to manage the asset, you know, who's going to who's going to be our operator.

Moishe Gubin: Well, the starting point is for every deal we look at, there has to be a reasonable sense on who's going to manage the asset, who's going to be our operator, if they have the financial wherewithal to make sure that our rent is bulletproof, that we're going to get paid. This deal specifically is almost a perfect deal for this operator. They own a physician practice already. They are a master lease of ours. This fits right into their geography where they are. Their operational experience fits perfectly in running a hospital with the physician practices that they already have. This worked. I would say going forward, and it's been like that in the past, we're open-minded. We typically have only really bought nursing homes and anything connected to nursing homes, but we do now have people in our world that are assisted living operators.

Speaker #2: If they have the financial wherewithal, you know, to make sure that our our rent is bulletproof, that we're going to get paid. This deal specifically, is almost a perfect deal for this for this for this operator.

Speaker #2: They own a physician practice already. They are a master lessee of ours. And so this fits right into their geography, where they are—their, their, their, you know, their operational experience fits perfectly in running a hospital with the physician practices that they already have.

Speaker #2: So this works. I mean, I would say going forward and and it's been like that in the past. Like we're open-minded. You know, we we typically have only really bought nursing homes and anything connected to nursing homes.

Speaker #2: But we do now have people in our world that are assisted living operators. And if a deal would come in that's a CCRC, like we did in Maryville— and, and, and, uh, huh?

Moishe Gubin: If a deal would come in that's a CCRC, like we did in Maryville.

Richard Anderson: Kingsport

Speaker #2: Kingsport, Maryville, those same deal for me. You can look two different places. So we have we have we have we have relationships with with now other people that we are looking at CCRC stuff where where we can either separate out the you know, the two sides with two different guys.

Moishe Gubin: Huh?

Richard Anderson: Kingsport.

Moishe Gubin: Kingsport, Maryville, those same deal for me, two different places. We have relationships with now other people that we are looking at CCRC stuff where we could either separate out the two sides with two different guys and make sure that the two operators have an agreement between them that they play nicely in the sandbox. In one deal, I act as like an HOA president between the two sides of the property, where I got two different people that are operating. One's running a hospital and one's running a nursing home. I play referee if those two can't get along. I'm HOA president, if you can imagine. That's just what I need in my life. It makes the deal work, and the two sides deal nicely with each other, and so far, so good. Look, we're open-minded. It comes down to fitting our box.

Speaker #2: And make sure that they, you know, the two operators, have an agreement between them—that they, you know, play nicely in the sandbox.

Speaker #2: I mean, one deal I I act as like an HOA president between the two sides of the of the property, where I got two different people that are that are, you know, operating two different ones running a a hospital and ones running a nursing home.

Speaker #2: And I play—I play, you know, referee if those two can't get along. I'm HOA president, if you can imagine. That's just what I need in my life.

Speaker #2: But it makes the deal work. And and, you know, the other the two sides, you know, deal nicely with each other. And and so far, so good.

Speaker #2: So, you know, look, we're open-minded. If it comes down to it, it comes down to fitting our box. You know, asset-wise, you know, these things all fit in our box.

Moishe Gubin: Asset-wise, these things all fit in our box. It's all healthcare, and it's all real estate. The one reason I try to avoid that stuff as buying it myself is because historically, we tell the marketplace that if, God forbid, something went wrong in our portfolio, I'm going to be the guy hopping on a plane, and I'm going to go there to stabilize it and make sure we don't have a major loss. I'll be the one sitting there operating until I'm able to stabilize it and turn it to the next operator. I personally don't know how to run a hospital. I wouldn't be able to make that same representation to the marketplace.

Speaker #2: It's all healthcare and it's all real estate. The one the one thing I try to avoid you know, for one reason the one reason I try to avoid that stuff as as buying it by itself is because historically, we tell the marketplace that if God forbid something went wrong in our portfolio, you know, I'm going to be the guy hopping on a plane and I'm going to go there to stabilize it, make sure we don't have a a major loss.

Speaker #2: And I'll be the one sitting there operating until I'm able to stabilize it and turn it over to the next operator. And I personally don't know how to run a hospital.

Speaker #2: So I wouldn't be able to make that same, you know, representation to the marketplace. Right now, we go to investor meetings and we tell people, look, we have such a good bulletproof income stream.

Moishe Gubin: Right now, we go to investor meetings, and we tell people, "Look, we have such a good bulletproof income stream." On top of all that is that, God forbid something goes wrong, I could go there and fix it. I could deal with it. I still have the operational experience. I have partnerships where I could get people to help that are part of our world. I'm not part of that world today, but I'm still an owner, that I could ask people to pitch in and help me out, and I could send nurses across the country, and I could do stuff. That's been the reason why we've shied away from it. A deal like this, perfect deal for our current tenant that we have. Very easy to add to the master lease. I think we're closing next week. It's just a good deal.

Speaker #2: And on top of all that is that, God forbid, something goes wrong, I could go there and fix it. I could deal with it.

Speaker #2: I still have the operational experience. I have a I have, you know, a a you know, partnerships where I could get people to help that are part of that are part of our world.

Speaker #2: I'm not part of that world today, but I am still an owner. But I could ask people to pitch in and help me out.

Speaker #2: And I could send nurses across the country, and I could do stuff. So that's been the reason why we kind of shied away from it.

Speaker #2: But, you know, a deal like this—a perfect deal for the parent, for our current tenant that we have—is very easy to add to the master lease.

Speaker #2: I think we're closing next week, and it's just a good deal. If there are more of these that fit Missouri, certainly this same tenant would take it and absorb it.

Moishe Gubin: If there's more of these that fit in Missouri, certainly this same tenant would take it and absorb it. That's the story there.

Speaker #2: So that's the story there.

Speaker #3: Okay. I just wanted to ask about the back half of this here, Jeff. What's the most that could be completed, you know, in that pipeline that you mentioned?

Richard Anderson: Okay. I just wanted to ask, back half of this year, Jeff, what's the most that could be completed in that pipeline that you mentioned? You associate $12 million of FFO to it, but what is that number? Is it $50 million? Less? More?

Speaker #3: You associate $12 million of FFO to it. But, I mean, what is that number? Is it $50 million less, more?

Speaker #4: So every week, Mike, Greg, and I go over our pipeline, and we've always—I think Mike has spoken about this in past earnings calls—where we say we've got high, medium, and low.

Moishe Gubin: Every week, Mush and I and Greg, we go over our pipeline, and I think Mush has spoken about this in past earnings calls where we say we've got high, medium, and low, that they could work out, that the deal will close. Recently, in one of our meetings, I actually said this is the first time that our pipeline is filled with deals that a majority of it is medium to high. There's a very good likelihood, and we were talking about it earlier. I think realistically, we can have about $130 million of real estate, at least close towards year-end. Then there's other deals that we're still looking at that could potentially close.

Speaker #4: Like, the likelihood is that they could work out, that the deal will close. And recently, we were in one of our meetings—I actually said this is the first time that our pipeline is filled with deals, and a majority of it is medium to high.

Speaker #4: So there's a very good likelihood, and we were talking about it earlier—I mean, I think realistically we could have about $130 million of real estate at least closed toward year-end.

Speaker #4: And then there are other deals that we're still looking at that could potentially close.

Speaker #3: Okay. Awesome. Thanks very much.

Richard Anderson: Okay. Awesome. Thank you very much.

Speaker #4: So, we've got about four and a half months till year end, so we're going to keep on working towards it.

Moishe Gubin: We've got about four and a half months till year-end. We're going to keep on working towards it.

Speaker #3: Thanks very much, everyone.

Richard Anderson: Thanks very much, everyone.

Speaker #2: Have a good weekend, Rich. Thank you for joining us.

Moishe Gubin: Have a good weekend, Rich. Thank you for joining.

Speaker #4: You too.

Richard Anderson: Yep.

Speaker #1: Thank you. Our next question comes from Mark Smith with Lake Street. You may proceed.

Operator: Thank you. Our next question comes from Mark Smith with Lake Street. You may proceed.

Speaker #5: Hi, guys. First off, just wanted to ask a little bit about SG&A. Yeah, it was I don't know if you guys can quantify maybe how much of the SG&A step-up was one time in nature versus kind of a a new higher bond rate.

Mark Smith: Hi, guys. First off, just wanted to ask a little bit about SG&A. Hey, Mark. Yeah. I don't know if you guys can quantify maybe how much of the SG&A step-up was one-time in nature versus kind of a new hire run rate.

Speaker #6: So it's not new hires. We have the team we have right now; we're fully staffed. When we get to—if and when we do this next deal, we're probably going to have to hire an asset manager, just to add one person to our team.

Moishe Gubin: It's not new hire. We have right now, we're fully staffed. When we do this next deal, we're probably going to have to hire an asset manager, just to add one person to our team. Otherwise, we're fully staffed. I'm going to let Greg answer about the SG&A because truthfully, the number that's in there that's an increase is because of me. I don't even know what it is because I wasn't part of the conversations. I don't even know what compensation committee granted me. It's all in stock that I never see. I get it, and I don't even notice it's part of my pool of shares that I own. I don't even know how much I'm getting paid truthfully, Mark. I'll let Greg answer, and we'll go from there.

Speaker #6: But otherwise, we're fully we're fully staffed. I'm going to let Greg answer about the the SG&A because because truthfully, did that the the the number that's in there that's an increase is because of me.

Speaker #6: And I don't even know what it is because I—I wasn't part of the conversations. I don't even know what compensation committee granted me.

Speaker #6: It's all in stock that I never see, so I get it, and I don't even notice it's part of, like, you know, my pool of shares that I own.

Speaker #6: So I don't even know how much I'm getting paid, truthfully, Mark. So I'll let Greg answer, and we'll go from there.

Speaker #4: Hey, Mark. How are you doing? So in regard to your question, the the first part about the one-time items, we had about about a little less than $800,000 worth of closing costs that were that were associated with some of the loans we closed in in in G&A.

Greg Flamion: Hey, Mark. How you doing? In regard to your question, the first part about one-time items, we had about a little less than $800,000 worth of closing costs that were associated with some of the loans we closed in G&A. That's a one-time item that I think you can disregard going forward. As for the salary, it's running about maybe $250,000 to 300,000 extra a quarter. That's something that will be, I guess, continuing going forward. That kind of answers your question as to what's the one-timers versus the things that we expect, the increases that we see going forward.

Speaker #4: So that was that's a one-time item that I think you can you can disregard going forward. As for the salary, I'm it's running about maybe 250 to 300,000 extra a quarter.

Speaker #4: So you you that's something that will that will be I guess continuing going forward. So that that can answer your question as to what what's the one-timers versus the the things that we expect to to increases that we see going forward.

Speaker #5: No, that that that's helpful. And and then I just wanted to ask a big picture. If you guys have seen much many changes or anything different as you look at kind of the deal pipeline, it sounds like maybe you're seeing some bigger deals come available in in negotiating and looking at.

Mark Smith: No, that's helpful. I just wanted to ask big picture if you guys have seen many changes or anything different as you look at kind of the deal pipeline. It sounds like maybe you're seeing some bigger deals come available and negotiating and looking at, but curious kind of what you're seeing out there in the market.

Speaker #5: But I'm just curious, kind of what you're seeing out there in the market. I mean, I thought I'd say it's—yeah, Jeff, you... Jeff can answer that.

Moishe Gubin: I mean, Yeah, Jeff can answer that.

Speaker #4: I think it's more similar, or the same. It's just a matter of—there's always, as we've said in the past, deals coming in day in, day out.

Geffen Feit: I think it's more similar to the same. It's just a matter of, as we've said in the past, there's always deals coming in day in, day out. It's very easy for us to decide on the deals that do make sense and don't make sense. For example, the deals that are one-offs on the West Coast or the East Coast, it's not something that we're really looking to go into. We've been looking to grow our master leases in existing states or in states that we know that we could continue to grow in. The deals have been coming in. There's been some bigger ones. There have been many smaller ones. If the deal's a 10-cap acquisition and we get that 125 coverage on day one, we've been putting our offers out there.

Speaker #4: It's very easy for us to decide on the deals that do make sense and those that don't make sense. For example, deals that are one-offs on the West Coast or the East Coast are not something that we're really looking to go into.

Speaker #4: We've been looking to grow our master leases in existing states or in states that we know we can continue to grow in, so the deals have been coming in.

Speaker #4: There have been some bigger ones. There have been many smaller ones. But if the deal is a 10-cap acquisition and we get that 1.25 coverage on day one, we've been putting our offers out there.

Speaker #4: And as Mike mentioned in his prepared remarks, it's an acquisition strategy that we've been sticking with, that we've gone with until now.

Geffen Feit: As Maish mentioned in his prepared remarks, it's something that's an acquisition strategy that we've gone with until now and we plan on sticking to. To your question, the deals, we keep on putting offers out, and as I said, we've actually been signing some of them up, so we're very excited to see where it leads towards year-end.

Speaker #4: We plan on sticking to it. So, to your question—the deals—we keep on putting offers out. And, as I said, we've actually been signing some of them up.

Speaker #4: So, we're very excited to see where it leads toward year end.

Speaker #5: Okay. So so so on the three deals that were signed up for that we expect to close this year, the three the actually, it's really four deals.

Moishe Gubin: On the three deals that we're signed up for that we expect to close this year, actually, it's really four deals. Without going to location and one of them goes into a master lease. Another one goes into a master lease. Another one is the biggest deal of the year right now, which will be its own master lease in a new state. Then we have a one-off new deal in a new state that we expect to get done. All of these deals open up for us new states and continue to grow master leases. We have deals out there now that have been worked on for outside of these three, four deals that we expect to get through before the end of the year.

Speaker #5: So so without without going to location and you know, one of them one of them is is is goes into a master lease. Another one goes into a master lease.

Speaker #5: Another one is a is is the bigger is the biggest deal of the year right now, which would be its own master lease in a new state.

Speaker #5: And then we have a one-off new deal in a new state that we expect to we expect to get done. All of these deals open up for us new states and and and continue to grow master leases.

Speaker #5: We have deals out there now that have been worked on, outside of these three or four deals that we expect to get through before the end of the year.

Speaker #5: We actually have a bunch of other stuff that's been, you know, in constant conversation for maybe a year or two years with people that, you know, a lot of the guys—a lot of the guys that are contemporaries or students. I call them disciples in my world, people that I've helped earlier in their careers.

Moishe Gubin: We actually have a bunch of other stuff that's been constant conversation for maybe a year or two years with people that. A lot of the guys that are contemporaries or students, I call them disciples in my world, people that I've helped earlier in their careers. A lot of them say, Wow, Moishe, you did good with Strawberry. We want to do the same thing. Then my response back to them says, Why would you want to do all the stuff that I did? This was nail-biting and as anxiety-laden process in dealing what we're doing. To make friends with all you guys that are on this call, it took how many years? Did we bang down a door, and then we have one meeting, and then we sit down with somebody, and then this, that. I mean, it just takes forever.

Speaker #5: You know, a lot of them say, "Well, Mike, you did good with Strawberry. We want to do the same thing." And then my response back to them is, "Why would you want to do all the stuff that I did?"

Speaker #5: This was you know, you know, nail-biting and and as anxiety-laden you know, you know, process and you know, dealing what we're doing." You know, to make friends with all you guys that are on this call, you know, to how many years did we banging down a door and then we have one meeting and then we sit down with somebody and then this, that.

Speaker #5: I mean, this takes forever, so I tell them, "Why don't you just merge yourselves into me, and we'll give you a board seat."

Moishe Gubin: I tell them, Why don't you just merge yourself into me, and we'll give you a board seat. You can be part of the team. We have like three things out there that's been going on for like a year or two that's festering, that are three big groups potentially. I don't know the timing of it. I would say that if I was giving you a 10-year picture, there's easily we're going to be able to go from where we are today. Most likely add $4 billion worth of property at some point, absorbing friends that want to be public also, and that I'm trying to convince, and they are sitting with me on a regular basis, that you don't want to go through the process of going public yourself. We already are now known.

Speaker #5: You can be part of the team. And so, we have like three things out there that have been going on for like a year or two.

Speaker #5: That's festering that are three big groups potentially. I don't know the timing of it, but I would say that if I was giving you a 10-year picture, there's there's there's easily we're going to be able to go from where we are today and and most likely add like $4 billion worth of property at some point, absorbing friends that that want to be public also.

Speaker #5: And that I'm trying to convince, and they are sitting with me on a regular basis, that you don't want to go through the process of going public yourself.

Speaker #5: We already are now known. We have a we have, you know, 6,000 shareholders or more. And people know who we are and the stock's trading finally.

Moishe Gubin: We have 6,000 shareholders or more, and people know who we are, and the stock's trading finally. The stock is up. It's still a major discount. To answer your question as far as pipeline or what kind of deals, there are some big deals that at some point are going to hit. We have some other deals that, a $250 million deal, a standalone that came in in the last few weeks, that there's easily a 50/50 coin flip that that deal happens. There's some other mid-size deals and everything else is what Jeff told you, has been the same as usual. Drips and drabs of smaller stuff, middle things. Just what comes in, and we jump on every single thing that makes sense for us. It's based on logistics.

Speaker #5: And the stock is up. It's still a major discount. And so, to answer your question as far as, you know, pipeline or what kind of deals, there are some big, big deals that at some point are going to hit.

Speaker #5: We have some some other deals that, you know, a $250 million deal, a standalone that came in in the last few weeks, that there's a you know, there's there's a there's easily a 50/50 coin flip that that deal happens.

Speaker #5: There are some other mid-size deals, and everything else is, as Jeff told you, the same as usual—just dribs and drabs of smaller deals and mid-level things.

Speaker #5: It’s just what comes in, and we jump on every single thing that makes sense for us. You know, it’s based on logistics.

Speaker #5: Like, if it makes sense for us, you know, then we could add it to a master lease where it's big enough for us to add a state.

Moishe Gubin: If it makes sense for us, that we could add it to a master lease where it is big enough for us to add a state.

Speaker #5: Perfect. That's helpful. Thank you, guys. You're welcome. Thank you.

Mark Smith: Perfect. That is helpful. Thank you, guys.

Moishe Gubin: You are welcome. Thank you.

Speaker #2: Thank you. Our next question comes from Gaurav Mehta with Alliance Global Partners. You may proceed.

Operator: Thank you. Our next question comes from Gaurav Mehta with Alliance Global Partners. You may proceed.

Speaker #3: Yeah. Thank you. I want to go back to your comments around the transaction market, where you mentioned that you worked on some deals that didn't close.

Gaurav Mehta: Yeah, thank you. I want to go back to your comments around the transaction market, where you mentioned that you worked on some deals that didn't close. Just want to get some more color on those deals that didn't close. Did those deals go at a lower cap rate to your competitors? Why do you think those deals didn't go through?

Speaker #3: Just want to get some more color on those deals that didn't close. Did those deals go at a lower cap rate to your competitors, or why do you think those deals didn't go through?

Speaker #4: Well, the math—the math was still the same math. It's still the same 10-cap. We haven't made an offer below our disciplined number, how we do things.

Moishe Gubin: The math was still the same math. It's still the same 10-K. We haven't made an offer below our disciplined number or how we do things. It's an interesting business. The nursing homes, when there's a change of ownership on the PropCo side, but the operator stays the same, it's peaceful. When the operator is changing to a new tenant that we're bringing in, there's potential turmoil. That period of time between a deal getting made and the change occurring, the seller is definitely afraid that his staff's going to walk out on him. The common conception, I don't know if this is in the regular corporate world also, but the common conception in a nursing home is they think if a place is getting sold, everyone thinks they're getting fired.

Speaker #4: You know, it's an interesting business. You know, the the the nursing homes if when when there's a change of ownership, you know, on the PropCo side, but the operator stays the same, it's peaceful.

Speaker #4: But when the operator is changing to a new tenant that we're bringing in, there's potential turmoil. You know, that period of time between a deal getting made and the change occurring, you know, the seller is definitely afraid that his staff is going to walk out on him.

Speaker #4: And, you know, the common conception—I don't know if this is in the regular corporate world also—but the common conception in a nursing home is: they think, if a place is getting sold, everyone thinks they're getting fired.

Speaker #4: And so they go and they go find start looking for new nursing new places to work. And they bail on the nursing homes. And it's it's it's it's this has been the way it's been for 20 years that I you know, 20 years or more that I've been involved with this.

Moishe Gubin: They go and start looking for new places to work, and they bail on the nursing home. This has been the way it's been for 20 years or more that I've been involved with this. The seller is definitely afraid of the employees finding out that there's a sale. When we go there, Strawberry Fields became an appraisal firm. We're not a nursing home group that's buying nursing homes. We're either bankers or we're appraisers or we're some other farce so that the employees that meet us don't get smart thinking that the place is being sold.

Speaker #4: And so the seller is definitely afraid of the employees finding out that there's a sale. So, like, you know, when we go there, Strawberry Fields became an appraisal firm.

Speaker #4: We're not a nursing home group that's buying nursing homes, you know, or a REIT that's buying nursing homes. We're either bankers or we're appraisers, or we're some other farce, so that the employees that meet us don't get smart, thinking that the place is being sold.

Speaker #4: So so you put that in perspective, you got you got you got more neurotic sellers that and and rightfully so, like they're worried they have a good business, they're making good money today, and they're and they're exiting with a good multiple and and they're happy to sell and and they're happy with the price and they're happy to take stock in Strawberry sometimes.

Moishe Gubin: You put that in perspective, you got more neurotic sellers that, and rightfully so, they're worried they have a good business, they're making good money today, and they're exiting with a good multiple and they're happy to sell, and they're happy with the price, and they're happy to take stock and Strawberry sometimes. They live in fear, you have to have a good guy on the other end says, Don't worry. You're giving it to me. I'll do what I can. I'll keep the secret safe. I won't blow the cover. They'll act a certain way. You have where the deal falls apart because somewhere in the middle, somebody finds something out, and the guy has to go tell his employees, Look, I'm not selling. This is what we deal with.

Speaker #4: But they live in fear. And so, you have to have a good—you know, the guy on the other end says, "Don't worry."

Speaker #4: You're giving it to me. I'll do what I can. I'll keep the secret safe. I won't blow the cover. You know, and they'll act a certain way.

Speaker #4: And so you have you have where the deal falls apart because somewhere in the middle, somebody finds something out and the guy has to go tell his employees, "Look, I'm not selling." And so we this is what we deal with.

Speaker #4: And and and, you know, I I play psychiatrist on the side with, you know, with telling a seller, you know, just it'll be fine.

Moishe Gubin: I play psychiatrist on the side with telling a seller, It'll be fine. This will work out. Okay, let's not take a tour or let's not do this, or why don't you send me that and we'll work around somebody finding out. I don't know if this helps the people listening, but there's such a delicate act of transitioning when you're transitioning a new operator. We sit there, and this year, for some reason, that's happened more. We had a deal in Tennessee that spent months on the deal in Tennessee, then at the end, one person said, No, I'm not dealing with this. We tried to make it work, and it was literally months of our life that just we're never getting back.

Speaker #4: This will work out. Okay, let's not take a tour, or let's not do this, or why don't you send me that and we'll work around, you know, somebody finding out.

Speaker #4: And so, I don't know if this helps the people listening, but there's such a delicate, delicate act of transitioning when you're transitioning a new operator.

Speaker #4: And so, we sit there, and this year for some reason that's happened more. We had a deal in Tennessee that spent months on the deal in Tennessee.

Speaker #4: And then at the end, one person said, "No, I just—I'm not dealing with this." And we tried to make it work, and it was literally months of our life that just weren't ever coming back.

Moishe Gubin: We had this other deal in another state, which is a deal that came back to us, went away, went back. They were difficult, but now we're marching towards a closing. Last one we had was one where we had a deal that we're buying something in a set bankruptcy deal. Some guy from out of left field started arguing that the price is wrong, and that the bankruptcy court should ask us for more money or sell it to somebody else. We end up in a fight with some random guy that shows up, and we end up paying a couple million dollars more on a deal that we made with the seller long before. The seller made a little bit more money. This other guy walks away, and I end up paying more money.

Speaker #4: And then we had this other deal in another state, which is a deal that came back to us, went away, then came back again.

Speaker #4: They were, they were, they were difficult. But now we're, we're, we're, you know, we're marching towards a closing. And then, the last one we had was one where we had a deal that we're buying something in a, in a, in a, in a set bankruptcy deal.

Speaker #4: And so some guy from out of left field started arguing that the price is wrong and that, and that, and that the bankruptcy court should ask us for more money or sell it to somebody else.

Speaker #4: And so we end up in a fight with with with some random guy that shows up and we end up paying, you know, a couple million dollars more on on a on a deal that we made with the seller long before.

Speaker #4: So the seller made a little bit more money. This other guy walks away, and I end up paying more money. Now, my tenant was fine paying more rent.

Moishe Gubin: Now, my tenant was fine paying more rent, so we still got the 10 cap rent. This is the strangest year of dealing with this stuff. This has nothing to do with pricing, valuation, cap rates, none of that. This is just wonky stuff that's just, it's been a weird year. Hopefully, you have a year like this where you deal with it, you come out strong. Everything is good. I'm still collecting all my rents. God said, Okay, I gave you the curve ball this year so that you're going to have a little bit of trouble in your life, even though everything worked out fine. Next year will be smooth sailing, and hopefully we'll continue to do that, $100 million, $150 million annual growth minimum.

Speaker #4: So we still got the 10-cap rent. But this is like the strangest year of dealing with this stuff. Like, this just— and this has nothing to do with, you know, pricing, valuation, cap rates, none of that.

Speaker #4: This is just this wonky stuff that's just it's been a weird year. So hopefully, you know, you have a year like this where you deal with it, you come out strong, everything is good, still collecting all our rents, and then and then God said, "Okay, I gave you the curveball this year so that you're going to have a little bit of trouble in your life, even though everything worked out fine." And so next year will be smooth sailing and hopefully we'll continue to do that, you know, 100, 150 million, annual, growth, minimum, I mean, we we, you know, the larger we get, that becomes a smaller growth and we want to then make that growth number higher.

Moishe Gubin: The larger we get, that becomes a smaller growth, and we want to then make that growth number higher. That bogey goes to $200 million at some point. All right, Bharath. Hopefully, that answered your question.

Speaker #4: So, you know, that bogey goes to $200 million at some point. So, all right, Greg, hopefully that answered your question.

Speaker #3: No, not yet. Thanks. Thanks for that color. Second question on the balance sheet, you talked about debt maturity in the third quarter, I think.

Gaurav Mehta: No, Dad. Thanks for that color. Second question on the balance sheet, you talked about debt maturity in Q3, I think. Can you maybe provide some color on where you expect the cost of debt to be as you go to Israel to raise some debt?

Speaker #3: Can you maybe provide some color on where you expect the cost of debt to be as you go to Israel to raise some debt?

Speaker #4: Yeah. So that's about $160 million that's sitting on our balance sheet. Again, that's priced out to the shekel right now.

Moishe Gubin: Yeah. That's about $160 million that's sitting on our balance sheet. Again, that's priced out to the shekel. Right now, the dollar was getting stronger again, and now it got weaker again. That averages out at about an 8% interest rate. If the dollar to shekel was better for us, we'd be better off just taking dollars in America at 6%. Right now, our cost is about 6.4% or so for our money in America. We pay off the 8% money at 6.4%. Because the currency is where it is, the better bet. Now, that could change literally in a month, the rate could go back to 340. We have to be nimble here. We have the Israeli market that supposedly still loves us. The interest rate, the last deal we did in May was 7%.

Speaker #4: The dollar—the dollar is getting stronger again. And now it got weaker again. So, so our easiest, and that averages out at about an 8% interest rate.

Speaker #4: If the dollar to shekel rate was better for us, we'd be better off just taking dollars in America at 6. Right now, our cost is about 6.4 or so.

Speaker #4: For for our money in America. So you know, we pay off the 8% money at 6.4. But because the currency is where it is, you know, the better bet I mean, now that that could change literally in a month.

Speaker #4: The rate could go back to 340. So I so I I we're we're we we have to be nimble here. But we have the Israeli market that supposedly still loves us.

Speaker #4: The interest rate—the last deal we did in May was 7%. So even if it's a little higher than the 6.4% in America, 7% is probably—it's all math, whether at that 7% we save a dollar, and then we don't have to eat the currency cost of buying shekels with dollars.

Moishe Gubin: Even if it's a little higher than the 6.4% in America, 7% is probably, it's all math. Whether that's 7%, we save a dollar, we don't have to eat the currency cost of buying shekel with dollars. We would realize the currency. Right now, we haven't realized the currency, the devaluation between a shekel and dollar. We haven't really realized it. It's an OCI. It's sitting there as a recognized but not realized loss. To not take that true loss, which I can't stand, that if I did, that would kill me personally. Most likely, our move is we end up taking shekel to pay off shekel, we have four years for the dollar to bounce back, which we expect to occur. That's a bunch of money in OCI that's going to turn around in our favor.

Speaker #4: And then you'd we would realize the the the currency right now we right now we haven't realized the currency you know, the devaluation between the shekel and dollar.

Speaker #4: We we haven't really realized it. It's in OCI. It's sitting there as a as a as a recognized but not realized loss. So to not take that true loss, which I can't stand that if I did, I would kill me personally.

Speaker #4: So most likely, I would move as we end up taking shekel to pay off shekel. And then we have four years for the dollar to bounce back, which we expect to occur.

Speaker #4: And that's, you know, a bunch of money in OCI that's going to turn around in our favor. So that's—either way, we're going to get an improvement from 8 to probably at least 7.

Moishe Gubin: Either way, we're going to get an improvement from 8% to probably at least 7%. One way gets rid of the interest rate risk, you realize a loss, one way doesn't get rid of the interest rate risk, you don't realize a loss. That's where we're at. I'm taking my religious Gentile CFO, we're going to take him to visit Jesus and everything in Israel for him, because he's never been to Israel. I take my religious Jewish COO, CIO, we're going to go and shake the money maker and bring in some shekels to pay off the bond debt. Hopefully, it'll be a good trip. We're leaving on 30 August, God willing, we succeed.

Speaker #4: One way one way one way gets rid of the interest rate risk, but but you but you realize a loss. And one way doesn't get rid of the interest rate risk, but you don't realize a loss.

Speaker #4: So so that's that's where we're at. So I'm taking I'm taking my religious Gentile CFO and we're going to take him to visit Jesus and everything in in Israel for him because he's never been to Israel.

Speaker #4: And then I take my religious Jewish COO, CIO, and we're going to go and shake the moneymaker and bring in some shekels to pay off the bond debt.

Speaker #4: And hopefully, it'll be a good trip. We're leaving on August 30th, and, God willing, we succeed.

Speaker #3: 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 #4: Thank you, Barav.

Moishe Gubin: Thank you, Bharath.

Speaker #1: Thank you. Our next question comes from John Masaka with B. Riley Securities. You may proceed.

Operator: Thank you. Our next question comes from John Massocca with B. Riley Securities. You may proceed.

Speaker #5: Good afternoon. So maybe just about the $133 million projection for AFFO in 2026. I know you talked about it a little bit earlier, but can you walk me through what exactly is assumed in that number?

John Massocca: Good afternoon. Maybe just the 133 projection for AFFO in 2026, I know you talked about it a little bit earlier, but can you walk me through what exactly is kind of assumed in that number? Is that just H1 times two?

Speaker #5: Is that just one H times two?

Moishe Gubin: No, I misspoke. That number I was referring to was a top-line, I think, rental number. I was saying that we're going from 145 to a 153 or 154. I was talking about rent. I think I misspoke. Our AFFO right now is about 74. That 74 is going to probably go to 83. I thought I said that also, but I might've misspoke somewhere in there, and I used the term AFFO versus, I was talking about rental income.

Speaker #4: No. I I I'm I'm misspoke. That number I was referring to was a top line, I think, rental number. I wasn't I was I was saying that we're going from 145 to a 1 153 or 155.

Speaker #4: I was talking about rent—I think I misspoke. Our AFFO right now is about 74. That 74 is probably going to go to 83.

Speaker #4: I thought I said that also, but I might have misspoken somewhere in there. And I used the term AFFO when I was talking about rental income.

John Massocca: Okay.

Speaker #4: But it relates to John's question. The $33, the $33—that's, I mean, that's just taking our AFFO times two divided by the outstanding shares and OP units.

Geffen Feit: As it relates to John's question, the $1.33, that's just taking.

John Massocca: Oh

Geffen Feit: AFFO times two divided by the outstanding shares and OP units.

Speaker #5: Okay. So, it's just what you've done in one H, not like 2Q times 4?

John Massocca: Okay. Is it what you've done in H1? Not like Q2 times four?

Geffen Feit: No. It's just the H1 of the year.

Speaker #4: No, it's just the first half of the year.

Speaker #5: Yeah.

Moishe Gubin: Yeah.

Geffen Feit: It's pretty stable between Q1 and Q2.

Speaker #4: But it's just—sorry. It's pretty stable between Q1 and Q2.

Geffen Feit: It's pretty stable between Q1 and Q2.

Moishe Gubin: I'm off today. We just came from the bris of my fourth grandson this morning, so I'm a little off my game.

Speaker #5: I'm I'm I'm I'm I'm off I'm off today. We just we just we just came from the brisk of my fourth grandson this morning.

Speaker #5: So, I'm a little bit—I'm a little off my game, sorry. Nope, no problem. And then, you know, thinking about maybe the prior conversation on, you know, issuing debt in the Israeli market, is there a size for the amount you're looking to kind of raise?

John Massocca: No problem. Thinking about the prior conversation on issuing debt in the Israeli market, is there a size for the amount you're looking to raise? I understand you do have a significant amount of capacity still on the revolver, but that would potentially be useful if as and if some of this deal flow you're talking about in the end of the year comes to fruition. How are you thinking about proceeds and how much of future investment volume maybe is financed with the revolver versus how much is financed with any additional capital you raise with Israeli debt?

Speaker #5: I understand you do have a significant amount of capacity still on the revolver, but that would you know, potentially be useful if you know, as and if some of this deal flow, you're talking about in the end of the year, kind of comes to fruition.

Speaker #5: So how are you kind of thinking about proceeds, and how much of, kind of like, future investment volume maybe is financed with the revolver versus how much is kind of financed with, you know, any additional capital you raise with Israeli debt?

Speaker #4: So, so, so the starting point is you'd need to take a minimum of 165 million shekels, which today comes out to, like, $55 million.

Moishe Gubin: The starting point is you need to take a minimum of ILS 165 million, which today comes out to $55 million. They do everything in a Dutch auction. Depending on the day where things are trading and where they're at, people are putting in closed bids. I don't believe that it's really secretive. They say it is. I don't believe it. You start with that number. If the bidding is good, we'll take as much as we can where the pricing is good, and it saves us, like I said, on the currency. We need ILS 160 million. Out of that ILS 160 million, we know for sure we would get ILS 55 to 60 million of it. Depending on the pricing, that number could go all the way to ILS 160 million, which I don't think we ever get to.

Speaker #4: And they do everything as in a Dutch auction. So, depending on the day, where things are trading and where they're at, people are putting in closed bids. I don't believe that they truly, you know, it's like really serious.

Speaker #4: They say it is. I don't believe it. But you know, you start you start with that number. If the bidding is good, you know, we'll take as much as as we can where the pricing is good and you know, and it saves us, like I said, on the currency.

Speaker #4: So, we need 160. We know we're going to get, out of that 160, we know for sure we would get, you know, 55, 60 of it.

Speaker #4: So depending on the pricing, that number could go, you know, all the way to 160, which I don't think we ever get to. So, most likely we're drawing on the line in some capacity.

Moishe Gubin: Most likely we're drawing on the line in some capacity. Between the line and that, we for sure will be fine paying it off. I would like to do the most we can if the pricing is good. The market loves us over there, at least they seem like they do. When it comes to action on pricing and deals, they're greedy like all the guys on Wall Street here as par as well. That's fine. Everyone wants to make money. We go there, they're happy to see us, and we're one of top five strongest companies in Israel as far as cash flow and how we could pay our debt with the cash flow we have. Hopefully, like I said, minimum $55 million, maximum ILS 160 million. It's probably somewhere in the middle, then we'll use the line of credit for the difference.

Speaker #4: But between the line and that, we for sure will be fine paying it off. I would like to do the most we can.

Speaker #4: If the pricing is good, you know, the market loves us over there. At least at least you know, they seem like they do when it comes to action on pricing and deals like they're greedy like, you know, all the guys on Wall Street here as far as well.

Speaker #4: You know, it's fine. You know, everyone can make money, but, you know, we go there, they're happy to see us. And we're one of the top five strongest companies in Israel.

Speaker #4: As far as, you know, cash flow and how we could pay our debt with the cash flow we have—so, you know, hopefully, like I said, minimum $55, maximum $160.

Speaker #4: It's probably somewhere in the middle, and then we'll use the line of credit for the difference.

Speaker #5: And then, that future kind of debt raising, could that potentially have a similar impact on G&A as some of the closing costs you saw in Q2, or is it just much less expensive than what went into closing?

John Massocca: Then that future kind of debt raising, could that potentially have kind of a similar impact on G&A as some of the closing costs you saw in Q2? Is it just much less expensive than what went into closing? I'm assuming most of those closing costs were tied to the credit facility. What went into closing the new-

Speaker #5: I'm assuming most of those closing costs were tied to the credit facility. So, what went into closing the new bank debt?

Moishe Gubin: Yeah

John Massocca: bank debt.

Speaker #4: Yeah, it's actually an interesting accounting thing. And when you're doing bond accounting, you have issuance costs that get amortized into interest expense over the life of the bond.

Moishe Gubin: Yeah. It's an actually interesting accounting thing. When you're doing bond accounting, you have issuance costs that get amortized into interest expense over the life of the bond. If the life of the bond is a 5-year bond, and you're paying your IB there one and a half to two points. You take that and you divide it by 5 years. Incrementally, you're bleeding into your interest expense, a smaller number, which is fine. In America, we're able to take a finance charge, and under FAS 91, I think it is, we're able to take that over the life of that loan. In this case, since it's the way it's written as a 3-1-1, you're taking it over 3 years.

Speaker #4: So if the life of the bond is a five-year bond, right, then you're paying your IB there one, one and a half to two points.

Speaker #4: So you take that and you divide it by you divide it by five years, right, incrementally, you have you're bleeding into your interest expense a smaller number, which you know, which which is fine.

Speaker #4: In America, we're able to take a finance charge and under FAS 91, I think it is, we're able to take that over the life of that loan and in this case, it's it's we since it's it's the way it's written as a 311.

Speaker #4: So you're taking it over three years. But what doesn't get amortized over the life is all the title work and all the closing costs and all the other BS that goes into the number appraisals and whatever other and so that that shit gets expensed, you know, in the in the period of where it was incurred.

Moishe Gubin: What doesn't get amortized over the life is all the title work and all the closing costs and all the other BS that goes into the number, appraisals, and whatever other. That shit gets expensed in the period of where it was incurred, and that's what hit us. If we would've taken that $700,000 or $800,000, like $760,000 or whatever the number is, and we would've divided that by 3 years, no one would even notice that there was a blip on the Even $768,000 is immaterial in reality. Take that over 3 years, $200,000, $250,000 in a year wouldn't even get noticed in a quarter. It's nothing, right? $32 million, whatever the number is. Because we had to take it when it occurred, and that's where you see that. In Israel, you don't notice that.

Speaker #4: And that's what hit us. It's not you know, if you if we were taking that 700 grand or 800 grand, like 760, whatever the number is, and we would have divided that by three years, no one would even notice that there was a blip on the even 768 is immaterial in reality.

Speaker #4: But, but, but, but take that over—you know, you take it over three years, you know, $200,000, you know, or $250,000 in a year wouldn't even get noticed.

Speaker #4: You know, in a quarter, like, you know, it's nothing, right? 32 grand, whatever the number is. But the the but because we had to take it when it occurred and that's that's where you see that.

Speaker #4: So, in Israel, you don't notice that. So you wouldn't see a hit to the—you wouldn't see a hit to the net income, because there's no real... you know, the accounting fee to do the letter over there is like $5,000.

Moishe Gubin: You wouldn't see a hit to the net income because there's no real. The accounting fee to do a letter over there is like $5,000. The law firm, we basically have on retainer, and we give them a little extra. There's so little in doing the issuance. The other benefit of doing the bond, which is what I like also, is when we need money in a pinch, it takes 3 days to do a private placement. If we're trading at par, then we give a guy 98 of par, and we'll have the money in 3 days, and we could do another $20 million, $30 million, $40 million. When we have a deal, right now we have Bond B that I could draw from if I wanted to on the private placement. We have Bond C that we have another few months before the lockout.

Speaker #4: And the law firm, we basically have on retainer, and we give them a little extra. So, like, there's so little in doing the issuance.

Speaker #4: The other benefit of doing the bond, which I like also, is when we need money in a pinch, it takes three days to do a private placement.

Speaker #4: So if we're trading at, you know, par, then, you know, we give a guy 98 of par and we'll have the money in three days, and we could do, you know, another 20, 30, 40 million.

Speaker #4: So, when we have a deal, you know, right now we have bond B that I could draw from if I wanted to on the private placement.

Speaker #4: We have bond C that we have another few months before the lock draw. We have capacity where our rating doesn't change.

Moishe Gubin: We have capacity where our rating doesn't change, it gives us ability. Assume for argument's sake, we make a deal, and we want to buy something for $200 million in January. We could just go draw on a line, take regular financing, use cash, do whatever you raise. We have so many tools available for us to be able to come up with the cash flow to close deals. Yeah, I think that answers your question.

Speaker #4: So it gives us the ability. So, assume for argument's sake, we make a deal and we want to buy something for $200 million in January.

Speaker #4: We could just go draw on a line and take regular financing, use cash, or do an equity raise. We have so many tools available for us to be able to come up with the cash needed to close deals.

Speaker #4: So, yeah, I think that answers your question.

Speaker #5: No, no, I appreciate all that—the detail. That's it for me. Thank you very much.

John Massocca: No, I appreciate all that detail. That's it for me. Thank you very much.

Speaker #4: You're welcome.

Moishe Gubin: You're welcome.

Speaker #1: Thank you. And as a reminder, to ask a question, please press *11 on your telephone. Our next question comes from Kenneth Billingsley with Compass Point Research & Trading.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Kenneth Billingsley with Compass Point Research and Trading. You may proceed.

Speaker #1: You may proceed.

Speaker #2: Thank you. Good afternoon. I didn't want your I didn't want your new slide to go unloved. I just want to clarify a comment. May I have misheard it?

Ken Billingsley: Thank you. Good afternoon.

Moishe Gubin: Good afternoon

Ken Billingsley: I didn't want your new slide to go unlogged. I just want to clarify a comment. I might have misheard it. On the occupancy, somehow you had said that was high. I just wanted to clarify.

Speaker #2: On the occupancy summary, you had said that was high. I just wanted to clarify.

Speaker #4: Yeah. For us, you know, the reason why I don't like that slide is because each state has their own occupancy, number one, and number two.

Moishe Gubin: Yeah. For us, the reason why I don't like that slide is because each state has their own occupancy, number one. Number two, this is a business that's efficiency based. For us, 77%, when we're in states that average occupancy is between 50% and 60%, is good. It gets to that number. Like the Kentucky portfolio is nearing capacity. Arkansas, as an example, is also somewhere in the middle of the road. We have the Indiana and Illinois, or really Indiana, where the occupancy is like in the 60s. It's a way lower number, but they're our best tenants who make the most money, and they have the most coverage.

Speaker #4: You know, this is a business that's efficient, that's efficiency-based. So for us, 77%, when we're in states that, you know, average occupancy is between 50% and 60%, you know, is good.

Speaker #4: And it gets to it gets to that number, you know, like the Kentucky portfolio is, you know, nearing capacity. Arkansas's. But Arkansas, as an example, is also somewhere you know, in the middle of the middle of the road.

Speaker #4: But we have the the the Indiana and Illinois, or really Indiana, where where the occupancy is like in the 60s. You know, it's a very it's a way lower number, but they're they're our best tenants to make the most money.

Speaker #4: And there's and they're and they have the most coverage. So that's why the slide is a little bit misleading because, you know, if you compare it against a portfolio of of stuff that's in, you know, like New York or California where everyone's at 99% occupancy, you know, you can't compare a portfolio of Midwest where average occupancy is like 60, 70 percent.

Moishe Gubin: That's why the slide is a little bit misleading because if you compare it against a portfolio of stuff that's in New York or California, where everyone's at 99% occupancy, you can't compare a portfolio of Midwest where average occupancy is like 60% and 70%. That's why I'm anti that slide. That 77 is an up for us. I think our portfolio ran like 68% and 69%, so 77 is an improvement in our portfolio, and you see it in our EBITDA number going up. The coverage for the rent is over like 2.2 now, something like that.

Speaker #4: That's why I— that's why I'm not— I'm anti that slide. But that 77 is an up for us. I think we— we used to run like 60; our portfolio ran like 68, 69.

Speaker #4: So, 77 is an improvement in our portfolio. And you see it in our EBITDARM number going up. The, you know, the coverage for the rent is over 2—it's like 2.2 now, something like that.

Speaker #4: So you know, we're you know, for our point of view, is someone's investing with us, they can rely on our dividend because there's we have a two times two times coverage on our dividend.

Moishe Gubin: For our point of view, if someone's investing with us, they can rely on our dividend because we have a 2x coverage on our dividend, and the rental income that's coming in, we have a 2x coverage on the rent, and we're being a good steward with the money, and we're stockpiling the cash, and being able to buy more stuff to make the value of each share grow up. That's our objective. We're thinking about the shareholder and how we're good stewards and custodians of what we're doing here. Occupancy really doesn't play a role in that, but I think I answered your question.

Speaker #4: And the rental income that's coming in, we have a two-times coverage on the rent. And we're, you know, we're being a good steward with the money.

Speaker #4: And we're, you know, stockpiling the cash and being able to buy more stuff to make the value of each share go up.

Speaker #4: So that's that's that's our that's our objective. We're we're we're thinking about the shareholder and how we're a good stewards and custodians of what we're doing here.

Speaker #4: And so occupancy really doesn't play a role in that. But I think I answered your question.

Speaker #2: No, I think so. Yep. And then on some of the comments you made about some of the new states—are these, I know you said one of them is a new master lease, and another one is a one-off.

Ken Billingsley: I think so. Yep. On some of the comments you made about some of the new states, I know you said one of them is a new master lease and another one's a one-off. Are these new partners or operators, or are they people you're familiar with?

Speaker #2: Are these new partners operators, or are they people you're familiar with?

Speaker #4: Yeah. They're they're well, we're familiar with them, but they're but they're brand new brand new to us. We're one is a sale leaseback and that's a new state, but we're expecting that's going to grow.

Moishe Gubin: Well, we're familiar with them, but they're brand new to us, where one is a sale leaseback, and that's a new state, but we're expecting that's going to grow. They're trying for the first time. We sat down with them, and we really feel that they're strong. They've been in the nursing home business for 20-something years, and now they realize it's better not to own the real estate, so they're doing sale leasebacks, which will give them more money for working capital on more deals. We should have more deals with these guys. The other one is a brand new portfolio in a new state, a new tenant for us. We know the operator to be, and we're expecting them to succeed and do well there.

Speaker #4: This is their trying for the first time. And we, you know, we sat down with them, and we really feel that they're strong.

Speaker #4: They've been in the nursing home business for 20-something years, and now they realize it's better not to own the real estate.

Speaker #4: So they're doing sale leasebacks, which will give them more money for working capital on more deals. So we should have more deals with these guys.

Speaker #4: And then the other one is a brand new brand new portfolio in a new state, new tenant for us. And and we know we know we know the operator to be.

Speaker #4: And we're expecting them to succeed and do well there.

Speaker #2: Okay. And you you talked about the potentials for partnering up and you threw out a number and and I just I'm just curious. If you were to be partnering up, just with limited resources, would you would you focus primarily on those partnerships as opposed to acquisitions that you've sourced on your own?

Ken Billingsley: Okay. You talked about the potentials for partnering up, and you threw out a number, and I'm just curious. If you were to be partnering up, just with limited resources, would you focus primarily on those partnerships as opposed to acquisitions that you've sourced on your own? The reason I ask is based on the number you gave, are these partners, do they have similar sized facilities, the debt being similar? I'm not asking you to get into all the detail, but could this be another 280 facilities that would come onto the books-

Speaker #2: And and the reason I ask is based on the number you gave, are they are these partners, do they have similar sized facilities? The debt being similar.

Speaker #2: And I'm not asking you to get into all the detail, but I mean, could this be another 280 facilities that would come onto the books if you were a partner with all these?

Moishe Gubin: Yeah

Ken Billingsley: If you were to partner with all these?

Speaker #4: Yeah. Yeah. Yeah. Let me let me clarify. So so right, there's two there's two there's two things here. There's managing the public market conversation, doing this stuff, which, you know, we're always learning.

Moishe Gubin: Yeah. Let me clarify. There's two things here. There's managing the public market conversation, doing this stuff, which we're always learning. I don't think we're great at this yet. We keep it real, we talk and we're friendly with everybody. That's a good starting point. There's the business of the public markets, raising debt, managing the relationships with the analysts and the IBs, raising equity and running a balance sheet from that perspective. There's also actually running the business, which is also balance sheet, but asset management. These kind of deals, what the benefit that they want is what we've already created, where people know Strawberry Fields and our platform and our stock trades already. We're not looking for anything to change the management on the company side.

Speaker #4: So, we're still—I don't think we're great at this yet. We're, you know, we keep it real, so we talk and we're friendly with everybody.

Speaker #4: So that's that's a good starting point. But that's, you know, there's there's the business of public the public markets, raising debt, you know, managing the relationships with the analysts and the IBs, you know, raising equity, and and running running a balance sheet from that perspective.

Speaker #4: But then there's also actually running the business, which is which is which is also balance sheet, but asset management. You know, these kind of deals, what what the benefit that they want is is is what we've already created where people know Strawberry Fields and and our platform and, you know, our stock trades are ready and, you know, and and so we're not looking for anything to change on management, on the company side.

Speaker #4: And then the tenants that they have—they're running their own version of a REIT, even though they're not a REIT. They're a for-profit, you know, LLC that rolls up that we would, you know, suck into our program, and the people that work for them that are managing the asset could come work for us.

Moishe Gubin: The tenants that they have, they're running their own version of a REIT, even though they're not a REIT. They're a for-profit LLC that rolls up, that we would suck it into our program, and the people that work for them that are managing the asset could come work for us, and we could eliminate a bunch of overhead that they have because we don't need a second CFO and maybe the accounting department needs another person, or asset management needs some people, obviously. We're looking that nothing would change. I wouldn't even call it a partnership. It'd really be us absorbing them, but them joining the board so that they're part of the future. In that sense, there's a partnership. It's Strawberry Fields that gets perpetuated long term, even if current ownership gets diluted and new people come to the table.

Speaker #4: And and, you know, we could eliminate a bunch of overhead you know, that they have because we don't need a second CFO and we don't need, you know, maybe the accounting department needs needs another person or or asset management needs some people, obviously.

Speaker #4: But we're looking at nothing would change. I wouldn't even call it a partnership. It'd really be us absorbing them, but with them joining the board so that they're part of the future.

Speaker #4: So, in that sense, there's a partnership. But, you know, it's Strawberry Fields that gets perpetuated long term. Even if current ownership gets diluted and new people come to the table, right, this should be a running business that can perpetuate for, you know, the next 50 years.

Moishe Gubin: This should be a running business that can perpetuate for the next 50 years, just keep doing what it does and keep growing and not changing philosophy and not changing how we buy and if we can absorb this stuff. In my mind, it's 100%, within 10 years, we end up absorbing a few of these guys. For their sake, right now, they're doing all this like as a mom and pop without the public market, but they're doing this as a mom pop, and from their point of view, it's like, if I could get an exit and I have Moishe who we trust and know, without me having to work hard like this, I could take a board seat and still see residual net income or distribution and cash flow. Why wouldn't I do that deal?

Speaker #4: And just keep doing what it does and keep growing and, you know, not changing philosophy and not changing how we buy and and if we could absorb this stuff, this this this but this is this is in my mind, it's 100 percent, you know, with within 10 years, we we end up absorbing a few of these guys and and because and for their sake, right now, they're they're doing all this like as a mom-and-pop without the public market, but they're doing this as a mom-and-pop.

Speaker #4: And for their point of view, it's like, if I could get an exit and and I have motion who we trust and know, you know, we could just without me having to work hard like this, I could take a board seat and still see residual you know, you know, net income or, you know, or distribution and cash flow.

Speaker #4: Like, why wouldn't I do that deal? And so that's the light bulb that's going off with my—with the people out there that are peer-level folks today.

Moishe Gubin: That's the light bulb that's going off with the people out there that are peer level folks today that we've known for many years that say okay. We're working on that. It's a slow process, but we'll get there. There's no doubt in my mind within 10 years, our company is four or five times the size we are today.

Speaker #4: That we've known for many years that say, "Okay." And so that's—so we're working on that. It's a slow process, but we'll get there.

Speaker #4: I'm I'm not there's no doubt in my mind, you know, within within 10 years, this this our company is, you know, four or five times the size we are today.

Speaker #2: Great. Thank you.

Ken Billingsley: Great. Thank you.

Speaker #4: You're welcome.

Moishe Gubin: You're welcome.

Speaker #1: Thank you. I would now like to turn the call back over to Jeff Beitner for any closing remarks.

Operator: Thank you. I would now like to turn the call back over to Jeff Bajtner for any closing remarks.

Speaker #3: No, thank you so much. I'd like to thank everyone for joining us today. Thank you for the questions, and thank you for your continued support.

Geffen Feit: Thank you so much. I'd like to thank everyone for joining us today. Thank you for the questions. Thank you for the continued support. If you have any questions, feel free to reach out to Mahesh, Greg, or myself. Our emails are at the back of the presentation. I'd like to wish everyone a good rest of the summer, and we'll see everyone in November.

Speaker #3: If you have any questions, feel free to reach out to Mariusz, Greg, or myself. Our emails are on the back of the presentation. And I'd like to wish everyone a good rest of the summer, and we'll see everyone in November.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Q2 2026 Strawberry Fields Reit Inc Earnings Call

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