Strawberry Fields REIT, Inc. - 2025 Annual Report (10-K) Summary
Business Context and Reporting Period
Company: Strawberry Fields REIT, Inc. (STRW)
Reporting Period: Fiscal Year Ended December 31, 2025
Business Model: Self-managed REIT specializing in the acquisition, ownership, and triple-net leasing of skilled nursing facilities (SNFs), assisted living facilities (ALFs), and long-term acute care hospitals (LTACHs).
Portfolio: As of December 31, 2025, the portfolio consisted of 133 properties comprising 143 healthcare facilities with 15,602 licensed beds across 10 states (Indiana, Kentucky, Illinois, Tennessee, Missouri, Arkansas, Texas, Oklahoma, Kansas, Ohio).
Lease Structure: Approximately 89.4% of properties are held under master leases with cross-default provisions. Average remaining initial lease term is 7.2 years with average annual rent escalators of 2.8%.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Rental Revenues | $154.999 million | $117.058 million |
| Net Income | $33.306 million | $26.505 million |
| Net Income Attributable to Common Stockholders | $7.575 million | $4.095 million |
| Funds From Operations (FFO) | $79.567 million | $60.193 million |
| Adjusted FFO (AFFO) | $72.465 million | $55.825 million |
| Total Debt (Gross) | $794.652 million | $673.935 million |
| Cash and Cash Equivalents (End of Period) | $66.758 million | $93.656 million |
| Annualized Base Rent | $142.7 million | $117.1 million (implied) |
Material Changes vs. Prior Period
- Revenue Growth: Rental revenues increased 32% ($37.9 million) driven by the re-tenanting of the Landmark and Kentucky Master Leases and contributions from 2024/2025 acquisitions (Missouri, Tide Group, Kansas).
- Acquisitions: Acquired 19 skilled nursing and 1 assisted living facility in 2025 for a total cost of $112.1 million, adding approximately $12.1 million in initial annual cash revenues.
- Expense Increases:
- Depreciation increased 23% due to new real estate investments.
- Amortization increased 125% primarily due to the amortization of an asset associated with a new note payable related to the Kentucky Master Lease.
- Interest expense increased 49% ($16.0 million) driven by new bond issuances (Series B), a new note payable, and increased mortgage interest.
- Debt Profile: Total indebtedness rose to approximately $794.5 million. New debt included $89.5 million in Series B Bonds (June 2025) and a $50.9 million note payable entered into for the Kentucky Master Lease restructuring.
Guidance, Outlook, and Risks
Management Commentary:
- Management continues to pursue accretive acquisitions in concentrated geographic areas to build regional density.
- Strategy includes reducing dependence on related-party tenants (currently 48.5% of annualized base rent) by diversifying the tenant base.
- Targeted leverage ratio is 45% to 55% of asset fair market value.
Risks and Contingencies:
- Related Party Concentration: 66 facilities (48.5% of rent) are leased to affiliates of Chairman Moishe Gubin and Director Michael Blisko. Failure of these tenants could materially adversely affect the Company.
- Regulatory Environment: Tenants are subject to extensive federal and state healthcare regulations (Medicare/Medicaid reimbursement, Anti-Kickback Statute, Stark Law). Changes in reimbursement rates or regulatory compliance failures could impact tenant ability to pay rent.
- Legal Proceedings: Multiple lawsuits filed by Joseph and Rosie Schwartz regarding prior acquisitions were dismissed with prejudice in March 2026. No appeal has been filed as of the filing date.
- Interest Rate Risk: Approximately 20.2% of total debt bears variable interest rates (SOFR + margin). A 100 basis point increase in SOFR would decrease annual cash flow by approximately $1.6 million.
Key Facts for Investor Verification
- Related Party Exposure: Verify the financial health and lease coverage ratios of the 66 related-party tenants, which represent nearly half of the Company's rental income.
- Debt Maturity Wall: Review the schedule of balloon payments, including significant principal due on Series A, C, and D bonds in 2026 and commercial bank term loans maturing between 2027 and 2029.
- FFO vs. Net Income: Note the significant difference between Net Income ($33.3M) and FFO ($79.6M) due to non-cash depreciation and amortization; FFO is the primary metric for REIT performance.
- Legal Status: Confirm the finality of the Schwartz litigation dismissals and monitor for any potential appeals despite the "with prejudice" ruling.
- Capital Deployment: Assess the yield and integration of the $112.1 million in 2025 acquisitions against the Company's historical weighted average lease yield of 13.9%.