Strawberry Fields REIT, Inc.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Strawberry Fields REIT Q3 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 1-1 on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to Mr. Jeff Beitner, Chief Investment Officer. Sir, please begin.

Thank you and welcome to Strawberry Fields REIT's Q3 2025 earnings call. I am the Chief Investment Officer and joining me today on the call are Marsh Gubin, our Chairman and CEO, and Greg Flamian, our CFO. Yesterday evening, the company issued its Q3 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 Field's 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 Q3 2025 performance. I wanted to start by sharing some key highlights. During the quarter, the company collected 100% of its contractual rents. As we discussed in last quarter's conference call, on July 1st, 2025, the company completed the acquisition of nine skilled nursing facilities comprised of 686 beds located in Missouri. The acquisition was for $59 million. On August 5th, 2025, The company completed the acquisition for a skilled nursing facility with 80 licensed beds near McLeod, Oklahoma. The acquisition was for $4.25 million. The company funded the acquisition utilizing working capital. The initial annual base rents are $425,000 and are subject to 3% annual rent increases. On August 29th, the company completed the acquisition for a healthcare facility comprised of 108 skilled nursing beds and 16 assisted living beds near Poplar Bluff, Missouri. The acquisition was for $5.3 million. The company funded the acquisition utilizing working capital and the initial annual base rents are $530,000 and subject to 3% annual rent increases. A couple other items I wanted to mention. During Q3, the Board of Directors approved increasing the dividend to $0.16 a share. This increase represented a 14% increase over previous quarters. Yesterday, the Board of Directors approved the Q4 2024 dividend, which will also be $0.16 a share and will be paid on December 30th to shareholders of record on December 16th. On the acquisition front, we continue to see deals coming from around the country. As we have discussed in previous investor presentations, we are a big fan of the master lease structure, and currently 89% of our facilities are in master leases. With our disciplined approach, if there is a deal in an existing state, our current operators are looking to grow, and we can simply add the new facility to an existing master lease. If we were to enter and grow in a new state, we would be looking to acquire a sizable portfolio of at least 500 beds. As a final point, I'd like to point out that Strawberry Fields REIT is currently the closest pure play skilled nursing REIT in the market, with 91.5% of our facilities being skilled nursing facilities. I would now like to have Greg Flamian, our Chief Financial Officer, discuss the quarter-end financials.

Thank you, Jeff, and welcome everyone to Strawberry Fields REIT third quarter 2025 earnings call. Let's begin with the balance sheet. Total assets reached $880 million, which is a 33.1% increase compared to Q3 of 2024. This growth is primarily driven by our acquisition strategy and the successful retention of specific leases. On the liabilities and equity side, we saw increases aligned with our financing activities and some foreign currency exchange losses, which impacted other comprehensive incomes. Overall, the balance sheet reflects our continued investment in long-term growth. Turning to our income statement, year-to-date revenue through September was $114.9 million, up $28.3 million versus September of last year. This increase is largely due to the timing and integration of properties acquired over the past year, as well as the retention of activity that began in January. While revenue is up, we've also seen higher expenses, mostly driven by depreciation, amortization, and interest. These higher expenses are a result of the acquisitions discussed earlier in the presentation. That income year to date is $24.5 million or 44 cents a share compared to 19.9 million or 40 cents a share last year. Looking at our quarterly performance, the drivers are similar to our year to date results. Revenue increased by 10.2 million, again, due to the acquisitions and lease transitions. Expenses rose as well, driven by higher depreciation, amortization and interest from new assets. Net income for the quarter was 8.8 million or 16 cents a share up from 6.9 or 14 cents per share in Q3, 2024. To close, I'd like to highlight some key financial metrics. Projected AFFO for 2025 is 72.7 million, a 28.2% increase over the last year with a compound annual growth rate or CAGR of 13.3% since 2020. Adjusting EBITDA projected at 126.1 million with 38.9% year over year with a 13.6 CAGR. Our net debt to asset ratio is 49.2%, maintaining a balanced capital structure. As of September 30th, our dividend was 16 cents a share, representing a 5.2% yield. With an AFFO payout ratio of 46.8%, we're delivering strong results while preserving capital for future growth. These results reflect our disciplined execution and commitment to long-term shareholder value. With that, I'll turn it back over to Jeff Baitner, who will walk us through the portfolio highlights.

Thank you, Greg. I'd now like to point out some of the Strawberry Field's REITs portfolio highlights. as of September 30th. Currently, the company has 142 facilities. This is comprised of 130 skilled nursing facilities, 10 assisted living facilities, and two long-term acute care hospitals. These facilities are in 10 states, and as you'll see later on in the presentation, we've got a map showing their locations. In these facilities, we've got 15,542 licensed beds. The company's total asset value at acquisition or its historical cost is 1.1 billion. I would like to point out that this amount reflects facilities which had been bought over the past 20 years. If you were to look at the company's fair market value of these facilities or the portfolio, it would be in excess of this amount. Currently, our portfolio has 17 consultants who advise operators. Our weighted average lease term is 7.3 years. Our tenants continue to do well, which is reflected by the EBITDA and rent coverage of 2.01. Our net debt to adjusted EBITDA ratio is 5.7. As I mentioned earlier, we're pleased that we continue to collect 100% of our rent. And as I mentioned earlier in my prepared remarks, the company continues to have a strong pipeline. We're seeing deals from across the country. And at this time, our acquisition pipeline is in excess of $250 million. And with that, I'd like to have Maish Gubin, our chairman and CEO, continue with the presentation.

All right. Thank you, Jeff. And thank you, Greg. Staying on this slide, I would just reiterate what Jeff has said. We've continued to grow, as we'll talk about in a future slide, with almost 15,500, well, the actual number is 15,542. Of course, we're going to keep growing. On the assets, total assets, we feel that our total assets, real true market value is probably closer to 1.6 billion. I would stress potential investors not to really spend time looking at our balance sheet for our equity or our assets to them because they are net of depreciation, which we rely on, of course, to have the extra surplus cash that we use to buy more assets. I would move on to the next slide and show you all our growth. Super proud. As we said on the previous slides, 13.3% growth rate. It was only five years ago that we made $38 million of AFFO, and now we are close to double that in five years. That's a good growth rate, a lot to be proud of. We'll hopefully break $73 million and next year do even better. On the next slide, this is one that I don't usually really spend too much time on. It's the base rank growth. Obviously, that's going to keep growing as we continue to buy. We're in the business of buying and leasing. We do not give options, so everything you see And looking at straight line rent should continue to be the same or better going forward. It's very rare that we sell something, even though in third quarter we actually did sell something. That being said, we'll go on to slide number eight. On slide number eight, this is something that we actually ended the quarter okay, within range of last year. Obviously, with the increased AFFO, we should be trading a lot higher than last year. We're continuously working for the shareholders, going to events. This week, we were in Arizona, meeting with new tenants and looking at deals. And like Jeff said, we have a very strong pipeline. Again, our bogey that we're trying to break is $150 to $160 spent a year. As we get bigger, we want to spend more, obviously. But we do our deals exactly the same way. We've talked about quarter in, quarter out, year in, year out. We are so disciplined on how we buy things. It has to fit or we don't buy it. On page nine, you see our growth rate. We try to educate the marketplace. You take the AFFO share growth of 11.3. You add that to the dividend yield, and we're steadily bringing a return of 16% to 18% a year. That's going to continue to grow. We've maintained the payout ratio to be below 50%. And we've not been erratic at all with how we've done our dividend. In fact, we've raised our dividend, I think, now already five, six times. And we will continue to do exactly what we're doing, paying out what we're paying, which this quarter, which we just announced, is 100% of our net income. And that leaves us $40 million or so from depreciation of surplus cash. to go use to buy more assets. So that's just funding our future growth. Love this. I love this slide. Slide 10, you could see our stock is undervalued. Our AFFO trading multiples on the right side, we are the lowest by far. And I believe our profitability is better than most, if not all, of our peers. That being said, we're going to keep working it. We're going to keep meeting investors. We're going to keep doing what we can. We're going to manage the manage the marketplace, continue. We're going to be doing a capital raise at some point. And when we do that, hopefully that'll help bring in more institutional investors and bring more liquidity to the stock price. On the next slide, page 11, you can see our payout ratio. Like I said, we're at 46.8. Everybody else is in the 70s or higher. Our dividend yield is middle of the road at 5.2. I would expect as our profitability grows, that dividend yield will grow. And because every time we raise a penny, right, if we're at 16 cents, we go to 17 cents, that's 1 16th. You know, that's, you know, close to 10% growth. And that puts the dividend yield at a nicer number. And that should happen. On slide 12, again, this reflects Jeff's comments. about us being the closest pure play read. You see, we're still almost 92%. And our peers are actually decreasing in percentage. And so again, this is a marketplace which whenever I have investor calls, we'd like to say, it's relatively bulletproof where the clientele that comes to us, they have to come to They have to go to our tenant because they need to be cared for a certain way. And with the baby boomers pushing, which we'll talk about in a future slide, the reality is that we think that we're in a good spot because it's a business that's government paid for, so inflation really doesn't affect it. And we keep going after giving the story. We feel that the investor public should be happy with us and things should pick up. On slide 13... You see what our AFFO by share growth, the growth rate over the last five years, we're at 11.3 as our growth rate. There's only two other of our peers that are positive. The other three are negative, which basically tells you that what do they do? They don't have enough AFFO to cover their dividends, and they have to sell equity to use the cash to be able to make paid dividends. In our case, we're paying dividends, and we have twice the amount of money so we can go use to buy more deals so that we can make the AFO per share grow because we're not increasing the amount of shares outstanding, but yet we're increasing the amount of money we're making. EBITDARM coverage, above two is acceptable at any level, and I'm happy with where it is, but it's going to continue to go. go higher. Now, because our investment is formulaic, every time we do a new deal and every deal is priced to a one and a quarter, we're fighting that EBITDARM coverage because of that. Because we're our worst enemy. We want to grow and everything we bring in is a one and a quarter, which lowers our EBITDARM coverage. So if we would stop buying, which nobody wants us to do, and we're not going to, but let's say if we did stop growing, then that EBITDARM coverage would go a lot higher because everybody, we give it to them and everybody's always trying to improve and succeed. Again, we're only leasing out to seasoned operators that know their marketplaces that are local and they continue to thrive and do better. And that's why the EBITDARM coverage would go up. Again, the fact that we grow, it makes it go down. Anyway, slide 14. This used to be one of my favorite slides, not so much anymore. Our debt is below 50% leverage, like we said, and our debt has turned into basically a third, a third, a third between HUD debt, bond debt, and bank debt. Interesting to note, really, that out of all of that debt, it's the bank debt, which is basically 23% of the debt. That's the only debt that's a variable rate. Everything else is with balloons that are at fixed rates. Um, like we talked about last quarter, the Israeli public on the last, on the last raise. And there's a lot of demand. They, they, they, we were over, they, they, they wanted to give us, they were over, uh, subscribed by twice, two times. We could have taken even more. Um, so going forward, um, we have a lot of, a lot of arrows in our, in our, uh, whatever the word is, we have a lot of different choices on what to do to raise debt. If we need debt, I'd like to see the stock price go up so that we can also sell equity at some point. Though I think debt is cheaper than equity at this point. Next slide, slide 15. This has become my favorite slide. This is as diversified as we've ever been, and we continue to get diversified where not a single state or a single tenant is over 25%. In our case, the 25% is the best state, which is Indiana. So we're in 10 states, like Jeff said earlier, and God willing, and like Jeff said earlier, we're only willing to go to new states if it's a sizable portfolio, as we are a fan of the master lease, like he said as well. And so we're looking at other states now, and we're looking to grow our relationships. All of our tenant relationships today are good. Like you said earlier, we're getting 100% of our rents, and our relationships with the tenants are good, where they're doing well, they're paying their rent, things seem to be, the building's being taken care of, so we have the ability to grow in other places, and we're going to try to do that. Slide 16 shows the map, and you can see how we're finding our way around. left and right. We really like the idea of Southeast, Mississippi, Alabama, Georgia. These are all places we'd like to, we'd like to go. Deals are hard to come by over there. Georgia seems to be the picking up that we'll be able to find something in Georgia. Again, pure play. You look at the, you look at the pie graph on the bottom. You see, you see 91 and a half percent sniff. And that's, That's what we do. So with that, I'd like to turn it over to the operator for questions and comments from our analysts and for those on the call.

Once again, ladies and gentlemen, if you have a question or comment at this time, please press star 1-1 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star one one again. Again, if you have a question or comment at this time, please press star one one on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Rob Stevenson from Jannie Montgomery Scott. Your line is open. Good morning, guys.

Did I hear correctly that you guys sold?

something in the third quarter yeah we we um we had an outlier in our portfolio one facility in michigan um that we owned for over 10 years so we basically doubled our money on the property to begin with um and it was an outlier we were never able to grow that region we wanted this was before this was really an asset that's been with us a long long long time And we were never able to grow into a normal master lease where this could have fit into and grow the region. We haven't had good luck buying in Michigan. So we had an opportunity to get out of the asset. The tenant that was there ended up, the math worked itself out where we raised rent elsewhere. So we stayed budget neutral as far as rent being collected or rent being collected. And the inverse of that is getting cash on a 10 cap for the portion of rent we're not getting. And so, yeah, so we paired down. That's why I went down from 11 states to 10 states. And we feel good about that transaction. We're usually never a seller. We don't give options to anybody. But this was an asset that really we should have moved this asset a long time ago. The operator that was operating it, they were sending in a nurse consultant from Indiana. They were sending in a marketing team from Illinois, and they were really struggling with on the ground. And the facility had good care. I mean, the survey results were fine, but they just weren't able to move that building forward. And they were always marginally making like maybe a one coverage, maybe even a drop lower. And so finally got an ability to sell it and they're happy, we're happy. But that's a one-off kind of deal for us, Rob.

And what were the proceeds from that? How meaningful was that?

It's immaterial. We sold it for, I think, 2.6 or so, and we gave them a note or we took a note at 10% interest, which is our 10 cap. And so they have a couple of years to pay it off with a balloon. And they're actually operating well there already. And we're good with this transaction.

Okay. And then what do your acquisition pipeline look like today? How are you guys thinking about the end of the year and into 26 at this point?

So end of the year at this point, we had a couple of hot deals that would have been great to end the year. We would have had to do a capital raise. It would have been a beautiful ending to the year. And now it seems like there's going to be – we should have some good volume in the first quarter, 26. And if 26 will be like 25 and 24, hopefully we break the $150-$200 million mark for next year for growth.

Okay. And then the comments around the dividend increase, would you guys at – sort of your minimum payout and was the increase from 14 to 16, basically something that you had to do, or is that something that the board wanted to do, um, at this point in time?

Yeah, that's, that's a, that's a great question. So like we sit here and we sit here at the board meeting and, and we lay out, I, you know, I act as, uh, you know, I'm the CEO. So I sit there and I basically lay out, you know, here's the deal for us to stay in week compliance to, to distribute 90%, um, for us to, uh, not be erratic with our dividend for us to satisfy, not to move our dividend yield up a little bit. And for us to, you know, keep, keep the investors happy. You know, we debate, we debate the topic. I mean, we, we have the capacity to distribute a lot more as you know, because our payout ratio is so low, the 90, the, the, the 16 cents is exactly 100% of our net income for the quarter. The year end number when we, when we end the year, there will be an adjustment somewhere that will include a little bit of capital gains, which you have to do a hundred percent of. So, so when, when it all comes, when it all comes down to it the, the they don't get a K one, the investors, I forgot the actual tax form that they get. There'll be a portion of this. That'll be a like a, that'll be a return of capital, which is not taxable actually. But it's a 10 99, but it's not a regular 10 99. I don't think, I don't know. I don't know exactly what the form is. But regardless, the conversation in the room is we know we're going to move every year, because the way our model is, it's status quo and going higher. We don't have the choppiness of going up and down. It's flat or higher. So we know that we're going to have at least one raise of a dividend a year. At least that's what we expect. And so we had just raised last quarter to $16 million. We could have made this one 17, but we left it at 16 for now. We'll see what fourth quarter brings. And then either, and most probably we'll end up doing the next bump will probably be either, probably not be the fourth quarter year, probably the first quarter of 2026. But yeah, that's basically the conversations that we have in the boardroom about the, we have a few board members that want us to distribute more. And I'm basically arguing that You know, we have this, you know, this 11% to 13% growth rate of AFFO because we're able to take this and spend it and do good with the money and continue the model and grow the model. And so right now that's the prevailing argument in the boardroom to keep the dividend, you know, higher than the requirements and constantly growing, you know, annually at least once a year to go up. And that's basically all the color on that topic, Rob.

Okay, that's helpful. And then can you remind me when the Series D bond matures? I think that's by far and away your highest cost of debt and when you basically get an opportunity there to refinance that.

Yeah, we have our bond debt expiring September of 26. On this topic, I guess most people wouldn't air their dirty laundry, but I'm an honest, straight up guy. So one of the flaws of the bond, which we're fixing going forward, is that there's a prepayment penalty all the way to the last day of the bond maturity. So we're holding out because the prepayment penalty today, because the bond is traded at such a premium, because it's such a high coupon, it costs us way too much money to refinance today. But come September time, there'll be a nice savings because we know that our, we know that we're going to get repriced out probably, you know, three points lower, uh, you know, maybe, you know, give or take a little higher, a little lower, but we'll save a ton of money, um, going forward. And that, and that reprices in September of 26.

And so at this point, you think that if you had to access the debt markets today, you're probably pricing somewhere plus or minus around a six.

Yeah. Yeah. They, they, yeah, 100%. Um, We know it. It's not even a question. If I want to take the money today, I think it would be maybe sub six. It's traded today at five above par. They love us. The actual yield on Series D today is in the fives. In theory, if we did a bond to replace it, the pricing would be the pricing would be a little bit higher because we would take five-year money. And because everyone's expecting rates to go down to lock in five years, they want to get a little bit of a premium. Actually, I think maybe – I think what I just told you is right. But I have to think it out to give you the right exact thought. But, you know, duration plays a role in the pricing up and down. So this is a short duration today, and that's why its rate's a little bit – it's as low as it is. And so I guess, yeah, that's the story there. The market there loves us. I love the market there. I do still really want to investigate doing similar to like with GMRE, like what their financing looked like with BMO and LEED and a couple of other guys. And so we're talking to our IBs to see what we can do here. But we're definitely going to keep a bunch of our debt staying in Israel.

Okay. I appreciate the time, guys. Have a great weekend.

God bless you.

Thanks, Rob. Thank you. Our next question or comment comes from the line of Barry Oxford from Colliers International. Your line is open.

Great. Thanks, guys. Just to build on Rob's question regarding the pipeline issue, It was at 300, I think you indicated last quarter. Now it's at 250. Is that just more a function of how you define your pipeline, but not necessarily a commentary on what's available out there in the marketplace?

Yeah, it's a moving target. Our pipeline, I mean, I don't know if our competitors or peers use pipeline as stuff that's inked already, that deals that are going to close. Our pipeline, we have high, medium, and low on probability of deals getting done. And so we're giving you the overall total pipeline. Again, we're very disciplined on how we buy, as you know. And so when we make a deal, that deal almost always closes. So we have to put in there the mix of the stuff that we've given LOIs as well as things that are in contract. So I don't know if that answers your question.

I'd add to that. I mean, it's almost like living and breathing. Every week it changes. We're constantly going to conferences. We've got people reaching out. And, I mean, 250 represents deals that make sense for us, not just deals that are sitting, I mean, in our emails. I mean, what's going on in our pipeline is ultimately deals that we believe that if we could get the LOI in and we could get it, I mean, locked up, we could close it.

Okay. Okay. Are you seeing, given that your property type is doing very well, it seems to be attracting investor interest, are you seeing more people showing up at the bidding process? Also, we've seen some REITs trying to add more to their skilled nursing.

First of all, I don't know if I agree with you, Barry. I was just with David Sedgwick on Tuesday, who I love by the way. Um, but they're, they're, um, they're not. And, and, and a lot of the other guys, they're, they're buying less sniff portfolios today. Um, and, and, and it seems like, you know, the, the assisted living product is still the, is still the, for some reason, that's the product of choice with, by a lot of the peers of ours. Um, I, I don't like it at all. Um, but, um, But no, it's the same competition that we've had. And for us, again, our sweet spot, first of all, people are still willing to make a deal with us because they know we're going to close a deal. And I guess that's the same with our competitors. But the difference between us and the competitors, you don't see the competitors doing these small deals. We look at big deals, we look at small deals. On the huge deals... Right. You know, Care Trust, Omega and the others are always going to beat us by pricing. It's not even close because they're willing to go eight, eight and a half cap and we stay at the 10. And then you have small deals like we've talked about before in the past. You know, like we have an owner operator kind of deal and they're willing to overpay because for them, you know, they they're going to be the administrator there. Their wife could be the D.O.N. Right. Or it could be their children with them. You know, it's like so for them, they don't have. have a different setup on how they operate and where their money's coming from. And if they get less of a return on their capital, you know, that's okay for them. It becomes a family or a legacy asset. And for us, we have the shareholders to think about and we just stay within our model. And with that, again, we, you know, that soft spot between, or that sweet spot for us between, I'd say, you know, 20 to $50 million deals you know, that's where we have a good shot at getting those deals. And then we also have these smaller deals that people come to us and just, they don't even market it. And so that's where our deals come from. Like the last few deals we did, these were all deals that they came to us. They didn't put it through a broker per se. And they said, you know, this is a deal that's for you guys and you want it. And we've done it. Includes includes the couple deals in Oklahoma and a couple deals in Texas. And with those same sellers, we have other deals that we know we're going to end up buying from them. So it's going to – it'll be – they're creating part of our pipeline. They're happy with the way we close a deal and the way we do business, that they want to do business again with us and bring us another deal.

Right. Perfect. Perfect. Then just kind of switching gears real quick, the G&A was lower by about $500 or $600. which is a good thing. But is that a good run rate, or will we see it move back up closer to the $2 million level?

Greg, do you know the answer to that?

I haven't really looked at the run rate for next quarter. I mean, to be honest with you, Q4, I would expect this to kind of take up a little bit more. So I guess if you want to answer right now, I'd say that we'll probably be closer to the $2 million. But I can give you a better answer, I guess, after the call, if you wish.

Yeah, I could just, Barry, just from a practical thought, we haven't added a new employee since I think maybe the first quarter when we added an asset manager. I think that was first quarter. We did hire a new lawyer, but we replaced a lawyer that was leaving after 14 years with us, and we brought in a new lawyer, and it was relatively budget neutral. So from that, we talked about in the past my personal compensation. That hasn't changed. And as far as board fees goes, you know, that stayed exactly the same. We haven't raised board fees in three years or four years. So that's... You know, that's, I guess, another positive about us. Only other thing that's out there that maybe that could be some G&A is legal, and that could be based on deals and financing and some other things that maybe makes one period more wonky. You know, having an ATM, which we haven't been using because the stock price isn't good, we still have to pay for comfort letters and all this and some of the work that needs to go for the ATM for the accounts and lawyers who made professional fees. But at this point, it's the same quarter over quarter. It's not, you know, we're not doing something new that's going to have a bunch of fees associated with it. So I would bet you that it stays relatively flat to what you see, give or take. You know, put yourself plus or minus a small margin of percentage difference. But, you know, because there are payroll differences, some quarters have an extra payroll, others don't. So that should be the answer.

Yeah. No, no, that all makes sense. Appreciate the time, guys.

Well, thank you, Barry.

Thank you. Our next question or comment comes from the line of Mark Smith from Lake Street. Mr. Smith, your line is open.

Hi, guys. You've talked a bit about kind of liquidity and ability to finance additional acquisitions. I'm curious, kind of your ability or thoughts around using stock more in future deals?

See, I love this question. One thing that gets lost in the investor public is that, and I'm going different than what your question is, and I'm going to try to remember what your question is when I answer it, but is that one thing that gets forgotten is when we issue a bond series in Israel, the bond series has capacity for a couple hundred million dollars more than we closed. So when we ever needed cash, if there was ever, like there's an investor public out there that might think, well, we might need cash and we're not going to be able to get the cash. In our case, because we have an approved bond series that's a lot higher than what our bonds are, than what we actually took, we have availability of money at the original, which actually in a private placement would be at the trading price, not at the coupon price. So in theory, if it's trading higher, then we're getting paid a premium to issue bonds more bond debt under a series that already exists in the past. That being said, as far as equity goes, I would love to sell equity. I would love to get more shares out in the public. I would like to get more liquidity in the stock. I would love to have more institutions be able to trade larger volumes of stock. We've done a bunch of deals so far where we've paid, where we've – been able to do stock. The last deal was the Missouri deal where I think they took 2 million in stock or 3 million in stock. And they're actually happy with it. We had an investor call with them and walked them through their return and they were happy with the stock. And I don't know if they're accumulating more at this point, but they're still holding it and they're happy to hold it. We need our stock to move. I don't know what the catalyst is at this point. Maybe we get into a really big deal And then we do a roadshow and sell a bunch of stock, you know, at a decent price. And then maybe that'll be the catalyst to make, you know, more trading happen and get the volume up. I mean, our AFFO is, you know, at this point is going to be a run rate of like, you know, $1.30, $1.40 for the year. You know, based on an average of 13 or 14 AFFO multiple, I mean, our stock is, you know, trading at a 40% discount or something like that. I mean, it's ridiculous. So I don't want to sell stock and dilute. The reality is our NAV is still probably at or around where the stock is trading. It's not a metric we use for anything other than me being conscientious, thinking about my shareholders and not wanting to dilute anybody. And that could be maybe a holdup that I shouldn't have, but I kind of still use that to... I'm looking out for the shareholder that they shouldn't be diluted. I know my peers don't care about that, and that's why one of the slides, if you look at the deck, sees where they have a negative AFO growth, and that's because they had to sell equities so they could pay a dividend, and that ends up hurting the shareholders. But I don't know. Mark, I don't know if I answered you, but that's my take on it. I would love it if somehow our stock you know, got to be in a normal range where I could just go then, you know, do a, do a, do an offering so that, you know, my, all my IBs can make a little money and we can bring in institutions and, and we could be off to the races. And that's, that's what I'm hoping that happens at some point soon. Okay.

I did also want to ask just if there's any impact on you or your operators here, you know, with the government shutdown.

Zero. The only impact that we have at Strawberry is we have stuff stuck in the HUD queue that they're not working. And without the HUD folks being able to process changes, we have a little bit of limbo on certain things. But money makes the world go round. And in our world, thinking about it from that point of view, you know, business is good. We're collecting all our rents. We're, we're, we're meeting all our obligations. And so it, it doesn't have a real impact, but, but reality is I have a bunch of loose ends that we'd love to tie up that, that, that aren't necessarily financial things. They're, they're just things that have to get tied up so that we, you know, that we, everything's, you know, tucked in so we could go to sleep at night, you know? So that's, that's, that's really the only thing that affects us. My tenants, I don't hear, I don't, I, I hear a little bit of noise regarding surveys because if they're not paying for that, there's not people that could go out there and survey them. And we had that problem maybe six, seven, eight years ago. And it ended up becoming a disaster because by certain regulations require the regulators to anytime they hear a complaint or this or that, they actually have to visit the property. and inspect, you know, investigate the complaint. And if they're not working and you have a buildup of six months worth of complaints, you know, because they don't act on it day one when they were working, right? So it takes them time. You know, it ends up being they show up in a year from now about something that happened a year ago. And then they say, you did something wrong a year ago. And they say, well, but as of now, we already fixed everything. It's not, we didn't do anything wrong today. And then they say, well, we have to give you a fine retroactively to back there. And so there could be some kind of exposure there. But again, I've argued over the years, the operators are seasoned people that know what they're doing. And even more importantly is they're nimble enough to recognize that there's ups and downs in business, especially in the nursing home business. Corona is the exception of being the craziest thing that any of us have seen, right? But like in a regular world, You have, you know, ups and downs, you know, labor disputes being one example. That happens, unfortunately, time from time, you know, and reimbursement being down and then up and down. You know, that just happens. So, like, the guys that know this business and are really in it because they really care about residents, but they also want to make a living, they are a business in the end. So they recognize that there's going to be ups and downs. So if there's something that is a little negative that comes out of this, so be it. It'll be okay. Okay.

Great.

Thank you.

You're welcome. Thank you. Thank you. Again, ladies and gentlemen, if you have a question or comment at this time, please press star 1-1 on your telephone keypad. Our next question or comment comes from the line of Vyacheslav Bobnikov from Freedom Broker. Your line is open.

Yeah, thank you very much for having my question. Can you hear me clearly? Yes. Great. Thank you. And yeah, my question is on capital allocation strategy in the context of the current market. As you said, there is a very huge discount implying about 16 to 18% annual. And maybe could you walk us through how the world weighs the immediate and certain aggression from a share buyback against the returns from a new property acquisition? And at what point that the valuation can become so compelling that Maybe buybacks would take precedence over even a good acquisition. Thank you.

Jeff, if you understood that, you can answer that. He was asking, I believe he was asking if we plan on doing a share buyback program to help get our stock price up.

I can rephrase, actually. Like, there is a kind of huge discount, and it implying a huge shield for investors. about 16, 20%, right? And there is like another decision to invest into new interesting opportunities in the market. And maybe you could walk us through how the board thinks about those two decisions, like buyback against new acquisitions.

So that's a really good question. The pluses and minuses of that dialogue are We recognize the need for more shares in the marketplace, not less shares in the marketplace, counterbalanced by the fact that we can buy back shares at a discount. That's true. And we've utilized it when like the stock really egregiously is like at $10 a share, we've used the buyback program that we have on file. We've used that a little bit to prop up the stock. Small, it hasn't been anything big. We still feel that, and this is not something that comes up a lot. This comes up conversationally, randomly, and it hasn't come up so recently because the stock was at more, it was over $12 again. But, you know, our model is, if we continue doing exactly what we're doing and we ignore, for this conversation, we ignore the stock price and we keep returning the collective AFFO growth plus dividend yield of a 17% return, we feel at some point that should be recognized by the investor public. And if we take the cash that we're producing and we use that cash to be able to continue the growth the way we're growing, you know, that meets our objective as a company to keep growing, you know, with a disciplined approach and making the high double digit returns and building a portfolio that'll continue to pay and doing it the right way. Meaning we're not squeezing our tenants like a lot of other people. We'd have that set model and how it works, which I think is fair that we put capital out there. We take risk because this is a, you know, It's not the simplest business to be in. And we take the risk. And for that risk, we're getting a 10% return, which we compound by doing what we do by, you know, adding debt and this and that. 10% return, I think, is fair. But what you're asking is a good question, because in reality is we could go and do that and then bring the stock price up. But then if there's less shareholders, there's less liquidity. And then inevitably, if somebody sells, it'll kill the stock price again at some point. So I don't know. At some point, if our model stops working because the stock is just not found favorable, we'll have to do something. And I don't know if that is the fix, but it'll be something that we look at. I hope that answers.

Thank you very much for your answer. Yeah, it helps a lot. Okay. And just a quick follow-up about the last call. There was a discussion about Illinois remains a laggard from a reimbursement perspective. Could you please kind of contrast the regulatory and reimbursement environments in kind of your states where you're starting to invest much more against these legacy markets?

Yeah. So, again, to reiterate what we said in the past, right, there's two basic types of reimbursement in the country for Medicaid. There's price-based and there's cost-based. The cost-based is simply put, you get reimbursed for what you spend. And in those states, those states are typically red states. And in those red states, you don't have any labor issues because you're able to pay people more because you get reimbursed more. You know, it's almost every dollar you spend on a nurse or a CNA, you get it back from the government. So you might as well take care of your staff easier because you have the money. Illinois is price-based, and that's basically the government gives you an allowance and says, live within your means. But at the same token, you know, in that case, I'm using labor as an example just because, you know, in that case, you have the employees that need to make more money because things are costing more money. And it's like an impasse because you want to give them more money, but the state doesn't give you more money to give them. And it's tough. So our portfolio... um in illinois um is performing it's just you have some that are doing amazing and and you have a bunch that are that are amazing i'm talking about is rent coverage i'm not talking about anything else um in that example um collectively they're positive um and everyone's paying rent um but but you have laggards and what's going on for our portfolio um the biggest the biggest tenant in illinois for about almost half the portfolio is stuff that I personally have an ownership interest in. And we've announced that it's known where if we have an opportunity, we will start divesting out of not the company, but the tenant, which is I'm related to the tenant. We will stop being in operations in some of these buildings because a mom and pop operator can do a better job because they don't have a corporate overhead of managing a bunch of homes. And so our Illinois portfolio as the landlord, hopefully I didn't confuse anybody here by mixing landlord-tenant kind of deal, but on the landlord side of things, we're getting our rent. The rent coverage is sufficient. It's over one. I don't know exactly the number for Illinois, but it's one something. And it's still out of laggard. Illinois is the biggest laggard, and that's really because the state has to catch up with the costs. And they will. They will. At some point, they always do. And in fact, you know, the union in Illinois actually is a help because they recognize, for the most part, they recognize that the government has to raise the money. And they were out there lobbying and trying to push, you know, for their members. They're pushing to try to get that the reimbursement should go up so that there's more money to pay their employees, to pay their members. So I think I answered your question. At the end of the day, Illinois, any price-based state, which really Illinois is the only one in this example that we have, is the laggard. And it's always going to be a laggard because the only way that it improves is that the state legislature has to be the one to vote to increase rates because there's no set methodology that says, okay, you spend X and therefore we'll give you back X. We'll reimburse you that X, you know, year in year two or year three, whenever they do it like the other states. And in this example, they just legislature has to say, OK, the the nursing homes are allotted X amount of millions of billions a year. And we have to give them more money because they have to cover their expenses. And and it has and it has to happen that way. So I think I answered your question.

Yeah, sure. Thank you. That's all on my side. Thank you very much.

All right. Thank you. Thank you. I'm sure no additional questions in the queue at this time. I'd like to turn the conference back over to Mr. Jeff Beitner for any closing remarks.

Thank you so much. And I'd like to thank everybody for joining us today. On behalf of myself, Greg and Marsh and the team here, We continue to work hard on behalf of our shareholders, making disciplined acquisitions and ultimately working on getting our stock price up. So if you have any questions on all our presentations in the back, there's both my email address and Marsha's email address. We're always available. We love connecting with our shareholders and investors. Have a great weekend. Thank you. Thank you, everybody.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.