Strawberry Fields REIT, Inc.

Good morning. My name is Matthew and I'll be your conference operator today. I'd like to welcome everyone to the Strawberry Fields REITs second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there'll be a question and answer session. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I would now like to turn the conference over to Jeff Beitner.

Thank you and welcome to Strawberry Fields REITs Q2 2025 earnings call. I am the chief investment officer and joining me today on the call are Mois Shkugin, our chairman and CEO, and Greg Flamion, our CFO. Earlier today, the company issued its Q2 2025 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 REITs 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. Investors are encouraged to review these non-GAAP financial measures, as well as the explanation and reconciliation of these measures to the comparable GAAP results included on the non-GAAP measure reconciliation page in our investor presentation. And now, onto discussing Strawberry Fields REIT and our Q2 2025 performance. I wanted to start by sharing some key highlights. During the quarter, the company collected 100% of its contractual rent. On April 4th, the company completed the acquisition for a skilled nursing facility with 112 licensed beds near Houston, Texas. The acquisition was for $11.5 million, and the company funded the acquisition utilizing cash from the balance sheet. The facility was added to the master lease of an existing third-party operator, and the initial annual base rents are $1.3 million and are subject to 3% annual rent increases. On May 22nd, the company entered into a $59 million purchase agreement for non-skilled nursing facilities located in Missouri. Eight of the facilities will be added to the existing master lease of our tenant, the TIE group, and the ninth facility will be added to another of our tenants' master leases, Reliant Care Group. Combined, these facilities will have an initial annual base rent of $6.1 million and are subject to 3% annual rent increases. The company closed the acquisition on July 1st, 2025, and funded the acquisition utilizing working capital. On June 24th, the company issued 312 million shekels in Series B bonds on the Tel Aviv Stock Exchange, which is approximately $90 million. The bonds are unsecured and were issued at par with a fixed interest rate of 6.70%. Subsequent to this issuance, $30 million was used to pay down existing secured bank debt that had a higher interest rate. By making this pay down, the company will be saving approximately 100 basis points. A couple of other items I wanted to mention. During the quarter, the company continued to pay its quarterly dividend and on June 30th made a payment of $0.14 a share. For the upcoming quarter, we are excited to announce that the Board of Directors has approved increasing the dividend to $0.16 a share. This increase represents a 14% increase in the dividend payment and the company continues to maintain its dividend payout ratio below 50%. On the acquisition front, we closed on a couple deals since the quarter end. The first was a $59 million acquisition in Missouri that I mentioned earlier in my remarks. The second was closed earlier this week for an 80-bed skilled nursing facility near McLeod, Oklahoma. The acquisition was for $4.25 million, which the company funded utilizing cash from the balance sheet. The facility was added to an existing master lease for a tenant of ours in Oklahoma and the initial base rents are $425,000 and subject to 3% annual rent increases. I would now like to have Greg Flamion, our Chief Financial Officer, discuss the quarter end financials.

Thank you, Jeff, and welcome everyone to the Strawberry Fields Reads second quarter 2025 earnings call. Let's begin with the financial position for the quarter. Total assets are $897 million, an increase of $261 million or .1% compared to Q2 2024. The asset growth was driven by three factors, our 2024-2025 real estate acquisitions, the re-tenanting of the landmark master lease and the Kentucky master lease, as well as proceeds from our new bond series issued in late June. The additional cash on the balance sheet was used as a source of funds for the Missouri acquisition that closed in July 2025. On the liabilities and equity side, we saw corresponding increases due to the financing used for the acquisitions in foreign currency translation losses and other comprehensive income. As mentioned before, in July we acquired nine properties in Missouri for $59 million. This slide shows a pro forma balance sheet detailing the impact of this transaction. The acquisition strengthens our regional footprint and supports our long-term growth strategy. -to-date revenue through June was $75.2 million, up $18.1 million compared to the same time frame last year. That's a .7% increase that was driven by timing and integration of the 24 properties that we incurred over that time period and the landmark to Kentucky master lease re-tenanting that began in January 2025. While we experienced higher revenues, the income growth is offset by higher depreciation, amortization, and interest expense, which is driven by new property acquisitions. This results into a -to-date net income of $15.7 million, or $0.28 per share, compared to $13 million, or $0.26 per share in Q2 2024. Our quarterly performance has drivers consistent with those discussed in our full year results. Revenue growth increased by $8.6 million due to acquisitions and lease re-tenanting activity. Expenses increased through depreciation, amortization, and interest expense. The quarterly net income is $8.7 million, which represents an EPS of $0.16 per share. This compares to an income of $7 million in 2024 with an EPS of $0.14 per share. Finally, I'd like to end my presentation with some financial highlights. Projected 2025 AFFO is $73.4 million, up .5% versus 2024. The projected 2025 AFFO represents a .6% 2020-2025 compound annual growth rate. Projected adjusted EBITDA is $125.4 million, a .4% increase -over-year. This represents a .5% 2020-2025 compound annual growth rate. Our net -to-net asset ratio is current assets at 49.1%. As of June 30th, our dividend was $0.14 a share, representing a .3% yield. Our AFFO payout ratio remains at 44.1%, providing our shareholders with a healthy dividend while allowing the company room to make acquisitions. These results reflect disciplined execution to our company's strategy and a continued focus on shareholder value. With that, I'll turn it back over to Jeff Baitner, who will walk us through our portfolio highlights.

Thank you, Greg. I would now like to present the portfolio highlights of our collective portfolio. These numbers include the recent acquisitions in Missouri at the beginning of July and also the acquisition that we closed earlier this week in Oklahoma. The company now has 141 total facilities that we own. That is 15,418 bags. Our total asset value at acquisition is $1.1 billion. Currently, we have 16 consultants advising to our operators. Our weighted average lease term is 7.4 years. Our portfolio's EBITDA rent coverage as of May 2025 is 1.98. Our net debt to EBITDA ratio is 5.6. We continue to be proud of our rent collection. That's 100%. And as a final point, our acquisition pipeline is currently in excess of $300 million. I would now like to hand over the microphone to Mike Schubin, our chairman and CEO, as he continues the presentation.

All right.

Thank

you, Jeff. Hi, everybody. I saw you get the fun task of doing the peacock walking around over here talking how good we're doing. As he's saying on page six, you can see how our projected 2025 diatropho is over $73 million. I previously predicted $75. We might still hit that, but in the meantime, our projections today is 73.4. Our projected 2025 versus 2024, our AFO growth is over 31%. Our growth rate from the last five years being a .6% growth rate. Our projected 2025 EBITDA, I don't really look at this number, but it's 125 million. That's also growing at a nice clip. You know, year over year, 38%. And over the last five years, also .5% growth. Our net debt to net assets, super proud, less than 50%. And that's after raising debt. Our stock price is still in the dumps and such. We were installing equity during the second quarter and to fund our growth that we needed to do, we took on debt and brought our net debt to net assets to be still below 50%. Our dividend yield as of June 30th is 5%. As Jeff said earlier, the board of directors today approved, or yesterday approved, a dividend increase from 14 cents to 16 cents, which puts our dividend yield, I think, at today's price about 6.4. So our projected AFFO payout ratio is still under 50%, which comparatively to our peers is better than everybody. Okay, on slide seven, you see our beautiful graph that from 2020 to 2025, like I said earlier, just two minutes ago, was a .6% growth rate, close to 39 million to 73 million. And that's really a testament to how we buy everything. As you all know, our discipline investor approach has us earning a 10% cash in cash on limited return on day one. And that should continue. We don't plan on changing how we buy and what we buy. Next slide. This slide is just simply similar in the growth rate, like the AFFO, our base rent, we're projected to hit the 2025 over $135 million top line rent. Super proud of that. We need to keep growing, obviously, to catch up to our peers. Next slide. This, unfortunately, is our stock price. It's part of our slides because, God willing, in future quarters, we're going to be able to do a victory lap as we hopefully start hitting highs. Our year high, I think, is $12.90. And right now, we're somewhere near low for the year. For absolutely no reason. Our returns are better. We continue to be able to make good investments with no bad debt. So on slide 10, like I was just saying about our stock price, on one side, unfortunately, our one year total return versus our peers has become the bottom. And in our area for trading multiples, you see we're being traded a lot lower than our peers. I'm hoping at some point, the investment public realizes what a deal our stock is. And our stock starts trading closer, at least to the next tier of LTC, Omega and Sabra, to be the mid-12 times, which should put our stock price probably somewhere at $14.50 a share. Next slide. In slide 11, you see our payoff ratio. We're the lowest, apparently, to our peers at 44%. Even once we increase the dividend, I think we still stay below 50%. So we have two times coverage of our dividend. Our dividend yield at 5.3 is at the low end. But like I said, once we increase the dividend for paying only third quarter before the second quarter, we'll be closer to 6.4. And that's hopefully before the stock hopefully moves a little higher. Next slide. As we've talked about in previous quarters, we are the pure play, closest pure play SNF real estate investment trust out there. Over 91% of our portfolio is skilled nursing facilities. What used to be most similar to us was Care Trust, and now they are at 50.9%. And so there's nobody even close to us. And we believe that the nursing home market, the SNF world, is a great area for us to be in. I mean, we have expertise, which mitigates risk for tenants going bad, which we haven't had. And it's one of the only businesses that is most of our tenants revenue stream comes from the government, which is protected. Medicaid, they're not doing anything to the Medicaid program, even though it was scared most recently. But that didn't play out to be anything important. And again, we always tell people like how our business is a need based business, as opposed to a lot of the other reach our want based business. If mom needs to be in a nursing home, you put mom in a nursing home. You know, the want based business, assisted living, if you can't sell your house, they don't move into assisted living, or retail, or all the other kinds of reach, maybe with the exceptions like the reach for prisons and all that, or post offices. But for the most part, most reach are wants, retail, multifamily. In this case, we're in need. And we think we're supposed to be with my background and my management team's background, being in the nursing home space previously. It provides a good support for our company for, you know, if there's any issues needed, strength and support from from us. Next slide. Just comparatively to our peers, again, this is going to become not a good data set, because as they move away from SNFs and they are who they are, this will, this should change. But in the meantime, our EVA DARM coverage is close to two. That continues to improve. Most recently, all of our Missouri portfolio, July 1 got a major increase to the rates. Tennessee, same thing as expected. And so our, I'm not sure a couple of other states, but we should see an increase in the EVA DARM coverage ratio. And we're right in the middle of that. As far as the AFO share growth, I think that's the big difference. You know, an investor that's out there, that's just looking at, that's just looking at dividends, and they're not looking at the total return. They may not realize the rate of investment this is. When you take a look at our AFO share growth compared to the peers, we're at an 11% growth rate, where most of the others are at a negative growth. We take that 11 in one growth and AFO share and add it to the dividend yield. We're talking about a 16 to a 17% return for the average investor, finding our stock today. And that's without the upside of the stock being traded at such a low value. So I would feel that's a very attractive stock to own. Next slide. This is one of my favorite slides where we talked already about the payout ratio, and we just talked about the AFO share growth. This just puts it to view, showing you the growth over the last five years. Just year over year from 111 to 127, you know, 16 cents on 111 is close to 14% for the year. So it's positive, and we're really proud of our company. Next slide. On slide 15, we're kind of aging out of this slide as well. Our company today, we're morphing into similar territory as our peers, still at a 50% debt, like we talked about before, an hour range, part of the range of 45 to 55%. If you look at this chart, you see how the bonds have taken over as being the largest source of debt. I love the Israeli market, and the Israeli market seems to love us in return, who just did a successful bond raise in the second quarter that we were oversubscribed by almost three times. And because the dollar was so weak, we took more money so they could pay down American debt that was in dollar denomination, and we recognized the unrealized capital gain on the currency exchange because we were able to pay off at a very good exchange rate, which once everything settles in three years, So whatever it is, we should recognize, you know, north of a $10 million currency exchange benefit. I know in this quarter, because of the dollar becoming weak or weaker, on our balance sheet, you'll notice a decrease in equity, which is based off of the recognized loss on currency. But in reality, we're way in the money, and I expect all of that to go away and turn positive and actually we'll realize net income from the currency at some point. That being said, HUD is 34-35%, and the banks are, you know, minimum of getting smaller. We do have expectation. I know last quarter, one of the analysts asked and I've answered, and we're on target to do exactly what I said earlier, which is we're going to refinance bond series C, D, and A in the next 12 months. And whatever the marketplace can absorb in Israel, because of size, we're going to do staggered maturities so that we don't have in the future, you know, maturity data too much in one time. But then whatever we don't do in the Israeli market, we will do in a conventional, unsecured credit line with one of the banks. And so hopefully by the end of 26, we should be in a nice spot between HUD bonds and banks. And similar to where we're at, maybe a third, a third, a third. I like to get the HUD debt to be a little higher, but in the meantime, we're still in the same range of, you know, a third, a third, a third, with the banks being the low end of that 22% and the bonds being the high end at 43%. Next slide. Slide 16 has become my favorite slide. To look at it, it's, we've diversified our portfolio by state and by consultants, by rent. And today, with the anomaly of Indiana being 25%, which is one tenant and two master, I think two master leases, outside of them, everybody else is below 18% as a percentage and as a group. And we're going to continue to diversify and we're going to continue to keep growing, you know, the wedge here that's other than the wedge there in Missouri. We're not growing Illinois. We're not growing Kentucky at this point. Tennessee, Tennessee, God willing, Indiana, God willing, and the new states, God willing as well. And so, this is really nice. Like we've talked about before, when we started this, you know, 10 years ago, 11 years ago, you know, in the form that it is now, we were two states with one operator, and now we're a lot more states with them all together. We're at 16 master leases and thank God it's gone very well. Last slide that I'm presenting is 17, that just shows you the map. We're growing, we're growing. 141 properties. That's exciting times for us. And with that, I believe I'm handing it back to Jeff.

Thank you, Maj. This marks the end of the company's prepared remarks. I would now like to hand it back to the operator who will be presenting questions to us from our analysts. Thank you so much.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. If you're listening through webcast and would like to ask a question, please click on the Ask Question box on the left of your screen. Type your question and hit submit. Please hold while I poll for questions. Your first question is coming from Barry Oxford from Colliers. Your line is live.

Great. Great, guys. Thanks for taking my question. Maj, when you look at your tenant base, I know you collected 100% of the rents, but do you have a tenant or two that you might have on a watch list currently? Or is the health of your tenants all pretty strong at this particular juncture?

That's a good question, Barry. Good morning. Good to see you. I'm glad to hear you. I would

say that our, if there's any weakness in our portfolio, it's not facility or operator. It's more, you know, the state. And right now, the state of Illinois, which used to be our biggest part of our portfolio, now is smaller, thankfully. Illinois still is the laggard. That has to do with reimbursement and staffing still, which is like an old topic, but no one really caught that anymore, which thankfully,

because the

nausea might have to defend it. But they're still paying the rent and they have a coverage over one, but they're not, that's still our struggling space today. We're re-tenanting a few of those properties at some rent than what we're getting now. It will increase our loss by a drop because we'll reset them to 10 years. But I don't, we don't really have anyone that's really struggling, that's more of a watch than what we do to begin with. I mean, just to give you an idea for our way of asset managing, you know, the asset managers are typically, you know, keeping an eye on surveys. We have a nurse consultant that's reviewing surveys from all of our tenants' facilities, and we're constantly, you know, monitoring what's going on there. And then we're in touch with the operators when there's a problem and then we push, we push to, you know, to get results. And if we have to even offer help with our nurse consultant helping them, it hasn't happened, but we offer. And so, and so we're keeping an eye on survey stuff as far as financial spreads. You know, we're doing that on a regular monthly basis when we get the data. And, and so, you know, everyone's watched the same way. But I guess, I guess the real, real eye today is, is, is the push from the, from the associations in Illinois to push for the reimbursement to improve. And it's just, it's just the perfect storm, you know, it's price based reimbursement. So you need to, you need to, you have to live within a budget, and then they put pressure on operators with union contracts and other things, which I'm pro-union happens to be. But regardless, the unions over there have gotten a higher base wage than everywhere else in our portfolio. And so the reimbursement has to catch up to it. So I think that answers your question. We're watching what's going on. We don't have anything in danger, but we have stuff that we're, you know, it's, you know, our eyes on and, and I'm not, I'm not too worried. I'm not too worried. Things will work out. God willing.

Right, right. But you touched on reimbursements and you talked on, you touched on the expenses, but is there some overriding concerns about Medicaid and, you know, how much they're going to bump?

So again, you know, the program,

you know, the Medicaid program is administered basically in two ways. It's either price based or cost based. So in, you know, to be specific to our portfolio, really Illinois is the only price based state. And from that point of view, you know, Illinois has historically always taken care of, you know, elderly and Medicaid program. And there's no real pressure on them. There's no pressure, of course, to cut anything, but the pressure is, is for them to keep up, keep up when, when there's rising costs. And historically, Illinois was always a little slower on the, on the uptick. And so I would expect, I would expect, I mean, rates have gone up. Don't get me wrong. When I first started this business, I think, I think, I think we have one of our buildings out here that I was part of the operations. We were getting 90 bucks a day or $94 a day as a Medicaid rate. I think today our average Medicaid rates are between 250 and $300. And that's, you know, 20, 20 years later. So I don't know what that equals if somebody could figure out the math, but I think that's a pretty good clip as far as, you know, you know, increased costs and increased revenue. I'm not, I'm not too worried. At the end of the day, the reimbursement, the legislature based on price based reimbursement. The only way it works is the, the state legislators have to go down to Springfield and then they have to allocate more resources. And, and their, their constituents and their districts and are all pushing and we're pushing as a, as an association, you know, any, any chance we get to talk to the regular, to the, to the politicians, because they're the only ones that can do it. It's not an act of Congress. It's an act of state legislature. And so I'm certain everything will work out. It's a blue state and the blue states always are better for caring for people as far as finding the money to fund, to fund these things. And I'm not, I'm not, I'm not, I'm not, I'm not too worried. It's an item. You brought the question up so I gave you an answer. But reality is this is not, I'm not losing any sleep over this.

Right. Right. And last one from me, switching gears. You have a decent acquisition, you know, pipeline right now. But given where your stock price is, how do you think about your cost of capital and how do you think about financing future acquisitions without getting too far out on, on, on the debt metrics?

Yeah, that's probably the most popular question I get when I talk to investors. That really is because, because, you know, there's, there's, you know, the parameters that you want to stay within that you don't want to upset, you know, the average investor that's looking for us to be within a certain range on things. If, if, if all things were equal and I had nothing to worry about and I knew that there was a brand of, of investors out there that would support my stock because our returns are going to be better than the next guy, then, you know, then I would push our debt level higher. You know, now our range is 45, 55. But, you know, my background in real estate, you know, there was times where I was 80% levered in my portfolio, you know, 20 years ago. We haven't been near there in many, many years, but, but, but, you know, I guess push comes to shove. You know, some point down the road, if the leverage really got to a point that it was like at 55 and, and we had a sweet deal. I probably end up selling equity cheap or take a mix of equity and debt. Because I really, I really want to respect the investor marketplace. I mean, I work for the shareholders regardless, but, but the investor marketplaces make or break in the long run of our company stock and how we're looked at, you know, you know, by you guys, the analysts and by, and by, and by the investors themselves. So I don't want to lose that trust and I don't want to lose, you know, the faith that they might have of us doing things, you know, responsibly and in a normal range. So today, today we don't got to worry about it. 50% leverage, which gives us an ability just even if we got to our own, our own 55 internal limit, you know, gives us enough room to add a bunch of debt if we needed to. And, you know, all of our banks and all of our lending has us to 65% leverage, which, which we're never going to get there. I mean, I can't see myself ever really doing that because that's like hitting like the ripcord that half the people that are that want to, that don't want to own our stock a certain way would have to dump our stock because we would get out of the parameters that most people are comfortable with. And I don't want to do that. So I think that answers your question. I, I, this is a better question to ask if we, if we end up finding a deal for two, $300 million. And, and the stock is still trading at $11, which would be just terrible. But if that would happen and, you know, then you say to me, what are you going to do? And then I'm going to tell you, you know, Barry, I'm going to make it work and we'll probably end up taking equity and, you know, you know, we shouldn't. But, but, but I think that's the move to make sure that everybody stays happy with us.

Perfect. Perfect. Appreciate the commentary, guys.

You're welcome. It's good to hear your voice.

Yes. Thank you.

Thank you. Your next question is coming from Kyle Katornczyk from Jani. Your line is live.

Hey, good afternoon, guys. Just picking back on Barry's question. Just trying to get an impact with potential reduction in provider taxes at the state level in the way that Medicare is, or Medicaid is financed.

Hey, Kyle. How are you? It's good to hear your voice as well. Yeah, that's another, that's, that's, that's, that's a good question. Really, our, our portfolio, we're only really affected, I believe, in Indiana. Indiana, I think, maxed out on the, on the IGT or UPL, depending on who you want to call it, in the federal matching. Federal matching pertains to the program that they're referring to. So, Indiana happens to be our strongest state. We have, we have coverages over two. Tenants does real well. The relationships with the hospitals there are really strong. And there's a lot of upsides still. That, but that, that, they're actually our weakest census state. Though I've told, you know, the investor public over the years, previous meetings, how, you know, we're on efficiency, you know, our tenants are an efficiency business, not an occupancy business like a lot of other REITs. Because most of the expenses on our tenants are variable and minimally fixed, whereas the other REITs are mainly fixed and minimally variable. So that being said, there's so much room for that tenant to increase bottom line, even though they're really our best performing state financially. But there's so much room for them and they'd be able to absorb, they'd be able to absorb. You know, I don't know if I want this on the record, if some politician hears this, I'm just saying that they can absorb a cut, you know. But the reality is, is that's really our effect in our portfolio. And that doesn't mean that we don't buy into a state and, you know, a new state with a new portfolio that can be affected by something over here. But, you know, you keep in mind that the starting point, and these are good talking points by politicians, but the reality is, is that most of these programs were created for, you know, rural, you know, states that have rural communities that, oh no.

I don't know, did I, did I

lose people or did I? You're still there. I can still hear you. Oh, I'm sorry. Yeah, my screen went blank. I thought maybe I lost power or something. So like I was saying, it's like, you know, the programs were created to bring revenue to, they wanted hospitals in smaller, you know, you know, if you needed to go to a hospital, they didn't want you driving, you know, a half an hour, 45 minutes or an hour to somewhere else. Same thing with a nursing home. They didn't want you, you know, if your mom is in a nursing home, you have to schlep an hour each way to a nursing home, you know, and somewhere else. They wanted a nursing home like per county, so it wouldn't be too far. So, you know, even though the politicians have good talking points and are, you know, are, you know, this is a good topic to talk about. The reality is, is that the underlying point that they want to accomplish is, you know, they want to have health care local to where people are and they want to meet the needs. So states like Indiana, which is why they're using the most of it, you know, you have counties with 5,000 people in them, you know, like, you know, Rose, you know, Jasper County or, you know, Rose Lawn or other counties. That are, you know, Newton County, like these are counties that have minimal, you know, 50, you know, not even 50,000 people, maybe 20,000 people. And they want them to have a nursing home nearby that they don't have to schlep, you know, far away. So again, I don't think, I don't think in the grand scheme of things, you know, these kind of changes are really going to happen. And I think the changes that the government wants that we'll end up doing and rightfully is, you know, make sure that the people that are supposed to be on the, you know, Medicaid or the ones that are on Medicaid, you know, wasn't meant for illegal aliens. It wasn't meant for, you know, a bunch of other people that are on it. I remember when I first started in this business, right, you had to prove that you were a citizen and even that you had to prove that you were sick. And you had to get, you know, some kind of assessment of pre-admission screening that really proved out if you were under 65 that you were eligible and deserving. And now they became so loose that you have all kinds of people that can get, can get on there. So Kyle, I don't know if I answered your question. I think I did. I believe, I believe at the end of the day, a lot of this stuff, which is healthy discussion, but in reality, you know, unless, unless they really want to go to a point where people really can't visit Mom and be so far away, I can't really see them really destroying it. I think, you know, terrible. And if there is a little bit of a cut, the one place that can take the cut is the place that would get the cut. So I think that's the answer.

Okay. Thank you for that. Appreciate it. And then one last one for me. You mentioned Tennessee and one other state had major increases to rates. How much did they increase over prior rates?

Well, I don't know offhand. I saw it was a good number. Missouri had had the biggest increase that I saw. They had just gotten another increase before. I think January rates went up big. I think July, they went up another easily 10 percent. I mean, I saw rates for some of our tenants that were going up 30, 40 dollars a day, which, which, which is easily a 10, you know, 10, 15 percent increase. If you need, if you need more data, we could find something. You can just email Jeff or, or myself and we could find you, find your response. Thanks, I appreciate it. I know.

Thank you. Your next question is coming from Grove Meta from Alliance Global Partners. Your line is live.

Yeah, thank you. Good afternoon. I wanted to go back to your comments on acquisition pipeline of more than 300 million dollars. Can you provide a breakdown of what's in the pipeline? Are you looking at any portfolios or are these single assets and then maybe breakdown by the market you're looking at? All right, Jeff, you want to answer that?

Yeah, currently we've got one deal we closed earlier this week. We have another small deal that we're working on in Missouri that we've got papered up and should be closing. Otherwise, we're looking at by and large just 300 million dollars is comprised predominantly in states that we're currently in. Some of them are bigger portfolios. Some of them, a couple of them are one of them is over 100 million. But the deals keep on coming into us. As we've said before, Marcia has been in this industry a long time. We've been going to these health care conferences probably three, four times a year. Everybody knows who we are and there's a lot of interest in us. I mean, there's the deals keep on. I mean, people keep on coming to us seeing what we could do if we want to go to a new state. But we're only going to go to a new state if it makes sense. We're going to go to a new state if it's a sizable portfolio, similar to what we did last year in Missouri and Kansas earlier this year. And once we get a mass release in a new state, we'll grow that as well. But the 300 million dollars really is right now. As I said earlier, we've got one more deal to close and we're just reviewing. We're working on reviewing a fair amount of deals and hopefully we'll be able to get a few more done before your end.

I think I think I think I think just to add

add to add to Jeff, we we would look at most states. There's a couple of states that are off, you know, that we don't ever want to go to. But there are other states that, you know, if the if the tenant is strong enough, you know, the guarantee is good. The financials are good. You know, then then then we'll entertain it. And so one of those marginal states that typically we weren't so excited about. But, you know, for the right for the right for the right situation or the right tenants and all that would be a state like Connecticut or a state like Wisconsin. And so we're we're we're we're looking at we're looking at, you know, I mean, right now we don't have anything else in our pipeline as others that are outside of our current territory other than looking at a few deals of, you know, like that. Like I just said, it's maybe Connecticut, Wisconsin or the like.

OK, second question I had was on the rent cover. It seems like it moved up a little bit to one point nine eight from one point eight nine times last quarter. And you may be talking about, you know, how we should expect this rent coverage ratio going forward.

So so I talked about that before, you know, the thing is, is when we start brand new leases, every brand new lease we bring in is at a one and a quarter. So it kind of makes us take a step back when we're looking at the overall rent coverage as a metric. So everything we have is improving and and everything is everything is stable and improving. You're getting better and stable. So we're thriving, but it's stable. And so and so, you know, depending on the deals that we do, if you dilute the pool and we do one hundred fifty million and we put that all in one and a quarter and the rest of the portfolio that we're showing the number as a metric, you know, is I don't know. I don't know what number we're using for that. Maybe eight hundred million or billion something. So it's still diluted by nine by 10 percent. So like it's not so depending on how big our if we did no deals next year, that number would go way over to probably, you know, with the increases to the rates now, probably be two to a quarter to fifty. But, you know, if we do, you know, like we've done, we've done, I think, about one hundred and forty million in the last twelve months. So you figure we keep running at that clip, you know, that that growth goes from one, you know, one ninety eight to maybe, you know, two fifteen or something to twenty. It's going to keep improving because everything we have is is improving. And that's still we're still looking towards that, you know, the, you know, the the baby boomers and all that. What do we call that the silver tsunami, whatever it is? Silver tsunami. Yeah. So we're still waiting for that to happen. That hasn't even affected our portfolio yet. That's going to happen in the next few years. And that should be incredibly positive for our company and our shareholders.

I would add to Aisha's point there, specifically, as he mentioned to the previous question from Kyle, Tennessee is a long term state that we've been in. They got in they got a sizable increase a couple of years ago, but July 1st this year, they got another very good increase. So that's going to start flowing into the rent coverage. And then Missouri, where we were now up to 17 facilities, expect that to bring up the overall rent coverage as well.

Okay, thank you. That's all I have.

Thank you. Have a good weekend.

Thank you. And once again, everyone, if you have any questions or comments, please press star then one on your phone. Your next question is coming from Mark Smith from Lake Street. Your line is live.

Hi, guys. Most of my questions have been answered here, but I am just curious about kind of integration of new acquisitions as you guys have been really busy here this year. You know, any learnings and, you know, or any hiccups along the way that you guys can improve on?

You know, I think we're

really we have a good, you know, like we have a good warm machine here at the end of the day to absorb. That question would have been good maybe a year ago or a year and a half ago when we found out that we had some things that harder to absorb. And we created a whole transition checklist and, you know, at this point, at this point, you know, the way we operate, it's really turnkey with minimal exposure for, you know, things going wrong. Even if even our worst case scenario is the first month we collect a rental a little late, we get the rent bills out late with that doesn't happen. But that could be but, you know, we have, you know, doesn't affect our cash flow. At the end of the day, we really have a well ran and I guess, you know, that's, you know, you can't really believe me because I'm talking about myself, I guess, that this is well ran. But I would say that I have a well ran a well ran company and from getting the deal closed, once the deal is closed and absorbing and absorbing, getting the rent bills out and getting the rent in and paying the mortgages and, you know, the cash flow and running the financial stuff. Like that's that all runs real, real well. And bringing in the asset managers before we buy the asset and having them already have a baseline of how the facilities are and what to expect. That also helps us in preparation for when we absorb the asset, you know, because remember we're tripling up leases. So, so we don't, it's not like we have to sit there and figure out a whole bunch of, you know, cam calculations or, or tenant improvements or manager construction budgets. We don't do any of that. We're, we're as simple as we make a deal. All the documents are negotiated way before, before we close the deal. Once we close the deal, we already have our first month's rent guaranteed. Usually the money's already wired in before the deal closes. So, we're right when the deal is closing and, and we're off to the races and it's just, just down, I guess, and that makes us different from, I guess, most of the other reads as well. Because it's that triple net, you know, we don't have any, any idea. We don't have any of that, any other wonky stuff. So, like, it's just that easy to go and absorb it at this point. And, and the people that have been with us, we've had longevity with the employees and, and people know what they're supposed to do. And, and it's been good. It's been good. I like the question. Thank you.

And similar to that, just as we think about kind of GNA, are there any additional people that you need to bring in or do you feel like you've got kind of the whole infrastructure in place here today?

Yeah, like, like I said, I think someone asked that maybe last meeting or the meeting before, you know, our only real material changes that may occur. And I guess materials, to find terms, I don't know if any of this material when you have a balance sheet of a billion something, I don't know if 100,000 here or 200,000 there is material. But in regards to our, to our company, we're, we're, we have, we have the officers that we want to have at the top end of the company, which is myself and Jeff and Greg. And we've replaced out our chief funding, our chief legal officer to a new general counsel. And so, you know, we have what we need infrastructureally. I guess from an employee, you know, there's always maybe a need for a little bit of clerical help here and there. Maybe another person, maybe another asset manager as we grow as well. So maybe the fourth asset manager anywhere at three. But, but overall, the, on the cost side, the only real cost, while the cost savings when we finally eliminate the, we have a bond issuance or two bond issuances that are, that are, that are, that force us to have a accounting done and a separate board of directors and everything that costs us, you know, between the DNO and everything, it's probably about a million dollars a year that we're going to be able to eliminate. If not this calendar year, then it'll be in 26. So that'll be to the positive. And then to the other side, to the negative, at some point, at some point, I assume compensation committee on our board level will at some point pay me market wage. Right now I get paid $300,000 a year and I'm not complaining about it. We're fine. And that's probably why they're able to keep pushing it off year in year out to not give me a raise. But that might be an increase. And I'm not, I don't, I'm not thinking that that's going to break the bank regardless. But that's why we're ran so inexpensively because I get paid nothing compared to my peers, which is fine. So that's really our only other costs. You know, our office space where we are, we've been there, we've been there since inception. We don't expect those costs to go up. You know, it's really, it's really well ran, clean. You know, you could look at our financial statements as minimal amount of lines on them for someone to be able to analyze and take a look and see how we're operating. I guess most confusion that we have for the investor public is, there's our equity stack and how we have the LP units that somehow confuses folks on, on, because really I explain that to people as non-voting common. Anyway, I'm on a tangent. I hope that answers your question, Mark.

Yes, absolutely. Thank you. Thank

you. I will now hand the floor over to Jeff Bittner for webcast questions.

That does it from our end. There's no further questions. So I wanted to thank everyone for joining today. On behalf of myself, Mike, Greg and the team are very excited and proud of the strong quarter that we produced. And we look forward to continuing to provide stable returns to our shareholders in the future. If anyone would like to reach out to us, the slide on the screen right now shows nine of Mike's email. Feel free to send us an email and we will get back to you. I wanted to wish everyone a great weekend. Thank you so much.