Strawberry Fields REIT, Inc. - Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. Strawberry Fields REIT, Inc. (the "Company") is a Maryland corporation operating as a Real Estate Investment Trust (REIT) in a UPREIT structure. The Company owns, acquires, and leases skilled nursing facilities and post-acute healthcare properties on a triple-net basis. As of March 31, 2026, the portfolio consisted of 133 properties (132 owned, 1 leased) with 15,602 operational beds located across 10 states, primarily in Illinois and Indiana. The Company is classified as a non-accelerated filer, smaller reporting company, and emerging growth company.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Rental Revenues | $39,984,000 | $37,333,000 |
| Net Income | $9,474,000 | $6,991,000 |
| Net Income Attributable to Common Stockholders | $2,280,000 | $1,584,000 |
| Diluted EPS | $0.17 | $0.13 |
| Funds From Operations (FFO) | $20,927,000 | $18,261,000 |
| Adjusted FFO | $18,838,000 | $16,804,000 |
| Total Debt (Gross) | $791,432,000 | $794,652,000 |
| Cash & Restricted Cash | $69,658,000 | $71,086,000 |
| Operating Cash Flow | $17,494,000 | $18,966,000 |
Material Changes vs. Prior Period
- Revenue Growth: Rental revenues increased by 7.1% ($2.65 million) year-over-year, driven primarily by new acquisitions added to the Texas and Missouri master leases in the prior year.
- Profitability: Net income attributable to common stockholders rose 43.9% to $2.28 million. Total net income increased 35.5% to $9.47 million.
- Expense Management: Total interest expense decreased by 4.2% ($554,000) due to lower interest payments on commercial loans and the note payable, partially offset by higher general and administrative expenses (up 22.6% due to professional fees and salaries).
- Balance Sheet: Total assets decreased slightly to $878.6 million from $885.2 million. Total liabilities decreased to $828.0 million. The Company reduced its debt load slightly through principal repayments.
- Cash Flow: Net cash provided by operating activities decreased by $1.47 million to $17.49 million, primarily due to a $4.1 million decrease in accounts payable and accrued liabilities.
Outlook, Risks, and Contingencies
- Subsequent Event: On April 20, 2026, the Company entered an agreement to acquire a healthcare property in Marshall, Missouri (99 SNF beds, 60 hospital beds) for approximately $8.6 million. Closing is expected in Q2 2026, subject to bankruptcy court approval.
- Debt Maturities: Significant balloon payments are due in 2026 under Series A ($95.5M), Series C ($78.3M), and Series D ($55.5M) bonds. Commercial bank term loans have balloon payments due in 2027, 2028, and 2029.
- Legal Proceedings: The Company is involved in ongoing litigation with Joseph and Rosie Schwartz regarding property acquisitions in Arkansas, Kentucky, and Massachusetts. A second amended complaint was dismissed with prejudice on March 10, 2026, but plaintiffs have filed an appeal. The Company believes it has adequate defenses and insurance coverage.
- Market Risks: The Company faces interest rate risk on variable-rate debt (approx. 20% of total debt). A 100 basis point increase in SOFR would decrease annual cash flow by approximately $1.6 million. Foreign currency translation losses impacted comprehensive income due to fluctuations in the Israeli Shekel.
- Related Parties: Approximately 44% of tenants (64 out of 144) are related parties controlled by the Company's Chairman and a Director. Concentration risk exists in Illinois (27.1% of beds) and Indiana (21.8% of beds).
Investor Verification Checklist
- Verify the status of the appeal regarding the Schwartz litigation and potential financial exposure.
- Confirm the refinancing strategy for the significant bond maturities due in late 2026 (Series A, C, and D).
- Review the creditworthiness of related-party tenants, which represent a significant portion of the portfolio.
- Monitor the impact of foreign currency exchange rates on the valuation of Israeli bond obligations.
- Assess the timeline and regulatory approval for the pending Missouri acquisition.