Strawberry Fields REIT (STRW) Q3 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals positive financial performance, with increased assets, equity, and a higher dividend payout, indicating confidence in future growth. The Q&A section raised some concerns regarding Medicaid reimbursements, but overall sentiment remained positive, particularly with the expected FFO growth and base rent increase. The ATM program and increased liquidity are also favorable. While there are risks like regulatory issues and debt management, the optimistic guidance and shareholder return plan, coupled with a strong dividend history, suggest a positive stock price movement in the near term.
Key Financial Performance
Total Assets $661.5 million, which is $25.7 million or 4% higher than June 30, 2024, driven by real estate investments from five properties acquired during the quarter and higher cash balances from the Series A bond raise.
Total Liabilities $606.3 million, an increase of $21.1 million or 3.6% from the prior quarter, due to the Series A bond raise, offset by lower accounts payable and operating lease liabilities.
Equity $55.2 million, $4.6 million or 9.4% higher than the previous quarter, due to higher third quarter net income and the sale of additional common stock, offset by third quarter dividend distributions.
Year-to-Date Net Income $19.9 million, which is $5.5 million or 37.8% higher than the year-to-date net income in September 2023, driven by higher revenue from new properties acquired in the trailing 12 months, offset by higher operating and interest expenses.
Third Quarter Net Income $6.9 million, marginally lower than the net income from the prior quarter, due to slightly higher interest expense offset by lower G&A expenses.
Annual Base Rents from Acquisitions Increased by $1.525 million from the acquisition of two skilled nursing facilities for $15.25 million and $670,000 from the acquisition of a property for $6.7 million.
Cash Dividend $0.14 a share, an increase of $0.01 from the prior quarter’s dividend, representing the ninth consecutive quarter of paying dividends and the fourth increase.
Funds From Operations (FFO) Expected to be closer to $75 million next year, up from $57 million in 2024, reflecting a growth rate of 13%.
Debt Ratio Leverage ratio is around 50%, with a target range of 45% to 55%.
Stock Price Increased from $6.33 on October 1, 2023, to $12.69, indicating a significant appreciation in stock value.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Acquisition of Skilled Nursing Facilities: In August, the company completed the acquisition of two skilled nursing facilities with 254 licensed beds near San Antonio, Texas for $15.25 million, increasing annual base rents by $1.525 million.
Acquisition of Assisted Living Facility: In September, the company acquired a property near Nashville, Tennessee, consisting of an 83-bed skilled nursing facility and a 23-bed assisted living facility for $6.7 million, increasing annual rents by $670,000.
Acquisition of Nursing Facility in Indianapolis: Subsequent to quarter end, the company acquired an 86-bed skilled nursing facility in Indianapolis, Indiana for $6 million, increasing annual rents by $600,000.
Acquisition Agreement for Multiple Facilities: The company entered into a purchase and sale agreement to acquire eight skilled nursing facilities with 1,111 licensed beds in Missouri for $87.5 million.
Establishment of ATM Program: In August, the company established an ATM program to sell shares to the public, providing additional financing flexibility and increasing stock liquidity.
Dividend Increase: The board authorized a cash dividend of $0.14 per share, an increase of $0.01 from the previous quarter, marking the ninth consecutive quarter of dividends.
100% Rent Collection: The company collected 100% of contractual rents during the quarter.
Increase in Total Assets: Total assets increased to $661.5 million, a 4% increase from the previous quarter, driven by real estate investments from acquisitions.
Investment Strategy: The company plans to close on approximately $110 million of assets in the fourth quarter, aiming for an enterprise value of about $1.3 billion.
Focus on Master Leases: The investment strategy emphasizes acquiring properties under master leases with third-party operators.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Regulatory Risks: The company faces potential regulatory challenges, particularly concerning Medicaid reimbursements, which have historically lagged behind actual costs. Changes in administration may impact reimbursement rates, creating uncertainty in financial planning.
Economic Factors: The nursing home industry is sensitive to economic conditions, with occupancy rates affected by broader economic trends. The company noted that while urban facilities are recovering, rural facilities are slower to regain occupancy, indicating a potential risk in revenue generation.
Competitive Pressures: The company operates in a competitive market for skilled nursing facilities, where maintaining occupancy and managing costs are critical. The need to attract tenants and ensure they can cover rent is essential for financial stability.
Supply Chain Challenges: The company mentioned challenges related to staffing and operational costs, particularly in light of recent regulatory changes that have increased operational pressures on nursing homes.
Interest Rate Risks: Rising interest rates could impact the company's ability to leverage its assets effectively, affecting future acquisitions and overall financial health.
Debt Management: The company aims to maintain a debt ratio of around 50%, but increasing liabilities from bond raises could pose risks if not managed carefully.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Acquisitions: The company completed the acquisition of two skilled nursing facilities for $15.25 million, increasing annual base rents by $1.525 million. Additionally, an 83-bed skilled nursing facility and a 23-bed assisted living facility were acquired for $6.7 million, increasing annual rents by $670,000.
ATM Program: The company established an ATM program to sell shares to the public, providing additional financing flexibility and increasing stock liquidity.
Future Acquisitions: The company expects to close on approximately $110 million of assets in the fourth quarter, potentially increasing enterprise value to $1.3 billion.
Investment Strategy: The company focuses on acquiring properties with master leases and third-party operators, aiming for stable revenue growth.
Revenue Expectations: The company anticipates revenue to reach approximately $125 million next year, assuming no additional acquisitions in 2025.
FFO Projections: The company expects Funds From Operations (FFO) to be around $75 million for the next year.
Dividend Policy: The company plans to maintain a consistent dividend policy, likely increasing dividends in line with FFO growth.
Debt Management: The company aims to maintain a debt ratio between 45% and 55%, with a focus on long-term financing through HUD debt.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Cash Dividend: The board of directors authorized a cash dividend of $0.14 a share, an increase of $0.01 from the prior quarter’s dividend. This dividend will be payable on December 30, 2024, to shareholders of record on December 16, 2024.
Dividend History: This dividend will be the ninth consecutive quarter paying dividends, and it represents the fourth increase during that time.
Payout Ratio: The payout ratio is approximately 47%, signifying that the dividend is 100% of net income.
ATM Program: The company established an ATM program to sell shares to the public, providing additional financing flexibility and increasing stock liquidity.
Shareholder Return Philosophy: The company aims for a consistent and reliable dividend policy, with expectations that dividends will grow in line with FFO growth.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Is there a difference in cap rate or are the cap rates pretty close to each other, regardless of whether it’s a midwest or sunbelt?
A:We don’t see a difference because we don’t do--what we generally--you know, we run this company similar to the way I run my bank, OPHC, and that is I don’t--we don’t make many policy exceptions.
Q:How do you see occupancy in ’25? Can you continue to push occupancy much above this level?
A:Yes, I think that the census occupancy hitting operators’ financials are going to continue to do better...the more money they make, the easier it is for them to take care of their residents.
Q:Is it fair to say that going forward, you’re going to have to move the dividend basically at growth rate of the FFO, or not necessarily?
A:Yes, it’s most likely that as our FFO increases--I mean, more than most likely, I don’t know how you say it.
Q:Is the portfolio under contract with a third party consultant?
A:Yes, this is--like, our philosophy today is every new deal that’s in new places are completely non-related party.
Q:What impact are you expecting on Medicaid reimbursements or any other reimbursements?
A:The Title XVII and Title XVIII of the Social Security Act basically has the government under Medicaid having to reimburse the costs of running the nursing home.
Q:Review of Unclear Management Responses
A:Management's response to the question about the impact of Medicaid reimbursements lacked clarity and detail, particularly regarding specific expected changes or impacts on their business.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ATM
Chief
FFO
Indiana
Officer
acquisition
amount
asset
balance sheet
base
bed
cap rate
cash
day
deal
debt
dividend
facility
financials
income
increase
investment
line
master lease
money
number
nursing home
occupancy
party
people
point
portfolio
property
ratio
rent
share
statement
stock price
tenant
today
year
STRW Transcript
Strawberry Fields REIT, Inc. (STRW) Q3 2025 Earnings Call Transcript
Positive11-7
The earnings call indicates strong financial performance with increased revenue, net income, and dividend growth. The company has a balanced capital structure and plans for further acquisition growth. The Q&A section reveals proactive management strategies, including refinancing plans and strategic divestitures. Despite some unclear responses, the overall sentiment from the earnings and Q&A is positive, bolstered by dividend increases and acquisition plans. The lack of negative sentiment in analyst questions and management's optimistic outlook suggest a positive stock price movement in the short term.
Strawberry Fields REIT LLC (AMEX:STRW) Q4 2024 Earnings Call Transcript
Positive3-4
The earnings call presents a positive outlook with strong revenue growth, significant dividend increases, and successful capital raising efforts. Despite the public offering, the company's strategic acquisitions and consistent dividend policy indicate stability and growth. The Q&A section reveals management's confidence in maintaining leverage and securing financing, although there is some uncertainty around Medicaid percentage increases. Overall, the financial performance and strategic initiatives suggest a positive stock price movement in the short term.
Strawberry Fields REIT (STRW) Q4 2024 Earnings Conference Call Transcript
Positive3-3
The earnings call summary reveals strong financial performance, with increased revenue, net income, and dividends, alongside strategic acquisitions. The Q&A session highlights a robust deal pipeline and confidence in leverage management. While there is uncertainty about the Medicaid payer mix, overall sentiment remains positive due to growth in assets and shareholder returns, despite the public offering potentially diluting shares. The absence of a market cap suggests a neutral to positive reaction, but given the strong financials and optimistic guidance, a 'Positive' sentiment is appropriate.
Strawberry Fields REIT (STRW) Q3 2024 Earnings Call Transcript
Positive11-11
The earnings call reveals positive financial performance, with increased assets, equity, and a higher dividend payout, indicating confidence in future growth. The Q&A section raised some concerns regarding Medicaid reimbursements, but overall sentiment remained positive, particularly with the expected FFO growth and base rent increase. The ATM program and increased liquidity are also favorable. While there are risks like regulatory issues and debt management, the optimistic guidance and shareholder return plan, coupled with a strong dividend history, suggest a positive stock price movement in the near term.
STRW Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
