Strawberry Fields REIT (STRW) Q4 2024 Earnings Conference Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary reveals strong financial performance, with increased revenue, net income, and dividends, alongside strategic acquisitions. The Q&A session highlights a robust deal pipeline and confidence in leverage management. While there is uncertainty about the Medicaid payer mix, overall sentiment remains positive due to growth in assets and shareholder returns, despite the public offering potentially diluting shares. The absence of a market cap suggests a neutral to positive reaction, but given the strong financials and optimistic guidance, a 'Positive' sentiment is appropriate.
Key Financial Performance
Acquisitions $130.3 million of real estate acquired in 2024, up from previous acquisitions, contributing to a portfolio growth of 19.3%.
Base Rents Increased from $84 million in 2023 to $104 million in 2024, a growth of $20 million or 23.8%, due to new acquisitions and lease renewals.
Total Assets Increased by 27.7% to $170 million, driven by portfolio expansion and acquisitions.
Total Liabilities Increased by 23.6% to $134.5 million, due to financing activities related to acquisitions.
Equity Rose by $36 million, representing a 76.8% year-over-year increase, supported by equity raises and bond issuances.
Revenue Increased by $17.3 million, or 17.3%, driven by contributions from the Indiana II master lease and additional acquisitions.
Total Expenses Rose by $3.4 million, or 6.5%, primarily due to higher depreciation, amortization, and general administrative expenses.
Interest Expense Increased by $8.2 million, or 33.4%, reflecting additional financing costs associated with portfolio growth.
Net Income Increased by $6.3 million, or 30.9%, to $26.5 million, as revenue growth outpaced expense increases.
Adjusted AFFO $55.8 million, demonstrating year-over-year growth.
Adjusted EBITDA $90.6 million, with a year-over-year growth rate of 8.2%.
Dividend per Share Increased from $0.12 to $0.14, a 16.6% increase, reflecting the company's commitment to shareholder returns.
Dividend Yield 5.3%, with an AFFO payout ratio of 49.5%.
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Operating Highlights
Acquisitions: The company acquired $130.3 million of real estate, increasing its portfolio from 109 to 124 facilities and beds from 12,449 to 14,186, a 14% increase.
New Facilities: Acquired eight healthcare facilities in Missouri for $87.5 million and six facilities in Kansas for $24 million, expanding into the 10th and 11th states.
Market Expansion: The portfolio grew to 130 facilities across 11 states, increasing the tenant base from 10 to 14 operators.
Stock Performance: The stock price increased to over $12 per share, with a goal to trade at a multiple of 13-14 times FFO.
Lease Renewals: 88% of facilities are tied to master leases, with an average lease term increasing from 4.6 years to 7.4 years.
Revenue Growth: Revenue increased by $17.3 million (17.3%) due to contributions from new acquisitions and existing leases.
Debt Management: The company reduced debt by $24 million and plans to clean up debt by bringing in less expensive financing.
Dividend Increase: The cash dividend was increased from $0.12 to $0.14 per share, representing a 16.6% increase.
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Risk or Challenges
Competitive Pressures: The company faces competitive pressures in the skilled nursing sector, particularly in attracting institutional investors and maintaining a favorable stock price relative to peers.
Regulatory Issues: There are potential regulatory challenges that could impact operations, especially as the company expands into new states and works with various operators.
Supply Chain Challenges: The company may encounter supply chain challenges related to the acquisition and maintenance of healthcare facilities, which could affect operational efficiency.
Economic Factors: Economic fluctuations could impact the company's ability to maintain rental income and manage debt levels, particularly with rising interest expenses.
Debt Management: The company has a significant amount of debt, with total liabilities increasing by 23.6% to $134.5 million, which poses a risk if not managed effectively.
Lease Renewals: The company has several leases maturing in 2025, and the risk of not renewing these leases could affect cash flow stability.
Market Perception: The company is working to improve market perception and trading volume, which is crucial for future equity raises and overall financial health.
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Guidance & Outlook
Portfolio Growth: Acquired $130.3 million of real estate, increasing facilities from 109 to 124 and beds from 12,449 to 14,186, a 14% increase.
Tenant Base Expansion: Grew tenant base from 10 operators to 14 through acquisitions and lease renewals.
Lease Renewals: Renegotiated Indiana master leases for new tenant returns, maturing into 2034, with 88% of facilities tied to master leases.
Acquisition Strategy: Acquired eight healthcare facilities in Missouri for $87.5 million and six facilities in Kansas for $24 million.
Dividend Policy: Authorized a cash dividend of $0.14 per share, marking the 10th consecutive quarter of dividends.
Revenue Expectations: Expect base rents to increase from $104 million in 2024 to approximately $130 million in 2025.
Financial Projections: Projected adjusted AFFO growth and continued commitment to shareholder value through dividends.
Debt Management: Plans to clean up debt by bringing in less expensive debt and continue selling shares through ATM.
Stock Performance: Aiming for stock price to trade at a multiple of 13-14 times FFO, with a current price over $12.
Future Growth Strategy: Focus on disciplined growth in skilled nursing facilities, with plans to expand in the Midwest.
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Shareholder Return Plan
Dividend per share: $0.14 per share, payable on March 31, 2025, to shareholders of record on March 17, 2025.
Consecutive quarters of dividends: 10 consecutive quarters of paying dividends.
Dividend increase: Increased from $0.12 per share at the beginning of 2024 to $0.14 per share by year-end, representing a 16.6% increase.
Dividend yield: 5.3% yield with an AFFO payout of 49.5%.
ATM program: Established an ATM program to sell shares to the public.
Public offering: Completed an underwritten public offering of approximately 3.34 million shares for total gross proceeds of $35 million.
Equity raise: Raised $33 million through equity.
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Key Q&A
Q:Can you provide more details on the transaction market, specifically deal flow and pricing?
A:Moishe Gubin stated that their pricing strategy remains unchanged, and they only buy deals that fit their criteria. Jeff Bajtner mentioned a pipeline of about $350 million and highlighted their consistent growth in deal size, expecting to close around $150 million this year.
Q:What are your leverage expectations as you look to grow your company in 2025?
A:Moishe Gubin indicated that their target debt-to-equity ratio is between 45% and 55%, aiming for the lower end of that range. He expressed confidence in their ability to secure cash for deals.
Q:Did you provide a forecast for 2025 AFFO per share?
A:Moishe Gubin mentioned an expected AFFO per share of around $1.20, with a possibility of exceeding that.
Q:Can you discuss the status of your 2025 lease expirations?
A:Moishe Gubin confirmed that two leases are left to renew, with one expected to renew and the other not, as the tenant plans to vacate.
Q:What is driving the increase in Medicaid percentage in your operator-payer mix?
A:Moishe Gubin stated that they do not audit tenant financials and would need to investigate further to provide clarity on the increase.
Q:What were the diluted shares and units outstanding for the fourth quarter?
A:Jeff Bajtner provided the figures: 12.1 million diluted shares and 43.4 million OP units, totaling 55.9 million shares.
Q:How significant was the ATM issuance in the fourth quarter?
A:Jeff Bajtner mentioned that they issued 71,000 shares in October, totaling $861,000.
Q:Do you consider dispositions for future financing?
A:Moishe Gubin explained that their map reflects what they own, not what tenants operate, and they are focused on growth in specific states.
Q:What are your thoughts on the current political landscape affecting skilled nursing?
A:Moishe Gubin expressed that funding is a bigger concern than regulation, and he remains optimistic about future funding increases.
Q:Are there any other tenants you are concerned about for 2026?
A:Moishe Gubin indicated that he is not overly worried, although there are a few homes in the Chicago market that are struggling.
Q:How should we think about G&A as you model for 2025?
A:Moishe Gubin stated that G&A should remain consistent with the fourth quarter, with a potential increase of $1-2 million if a new employment agreement is signed.
Q:Any updates on the integration of newly acquired properties?
A:Moishe Gubin reported that the integration has been seamless, with no hiccups expected.
Q:Are you seeing any changes in the deals you are looking at?
A:Jeff Bajtner confirmed that their approach remains unchanged, but Moishe Gubin noted an increase in sale-leaseback opportunities.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding the increase in Medicaid percentage in the operator-payer mix, stating they do not audit tenant financials and would need to investigate further.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AFFO payout
AFFO rate
Anderson Wedbush
Bank equity
Barry Oxford
CEO CFO
CEO Gaurav
CFO Thursday
Commission ATM
ET name
End line
Fed wise
Gaurav Mehta
II master
Illinois tenant
Indiana II
Instructions conference
Interest expense
Investors REIT
Kansas acquisition
Kansas property
Kansas purchase
Lake Street
Missouri State
beginning
financing activity
healthcare facility
lease acquisition
lease term
option
portfolio expansion
portfolio facility
price facility
purchase price
tenant lease
tenant master
term lease
STRW Transcript
Strawberry Fields REIT, Inc. (STRW) Q3 2025 Earnings Call Transcript
Positive11-7
The earnings call indicates strong financial performance with increased revenue, net income, and dividend growth. The company has a balanced capital structure and plans for further acquisition growth. The Q&A section reveals proactive management strategies, including refinancing plans and strategic divestitures. Despite some unclear responses, the overall sentiment from the earnings and Q&A is positive, bolstered by dividend increases and acquisition plans. The lack of negative sentiment in analyst questions and management's optimistic outlook suggest a positive stock price movement in the short term.
Strawberry Fields REIT LLC (AMEX:STRW) Q4 2024 Earnings Call Transcript
Positive3-4
The earnings call presents a positive outlook with strong revenue growth, significant dividend increases, and successful capital raising efforts. Despite the public offering, the company's strategic acquisitions and consistent dividend policy indicate stability and growth. The Q&A section reveals management's confidence in maintaining leverage and securing financing, although there is some uncertainty around Medicaid percentage increases. Overall, the financial performance and strategic initiatives suggest a positive stock price movement in the short term.
Strawberry Fields REIT (STRW) Q4 2024 Earnings Conference Call Transcript
Positive3-3
The earnings call summary reveals strong financial performance, with increased revenue, net income, and dividends, alongside strategic acquisitions. The Q&A session highlights a robust deal pipeline and confidence in leverage management. While there is uncertainty about the Medicaid payer mix, overall sentiment remains positive due to growth in assets and shareholder returns, despite the public offering potentially diluting shares. The absence of a market cap suggests a neutral to positive reaction, but given the strong financials and optimistic guidance, a 'Positive' sentiment is appropriate.
Strawberry Fields REIT (STRW) Q3 2024 Earnings Call Transcript
Positive11-11
The earnings call reveals positive financial performance, with increased assets, equity, and a higher dividend payout, indicating confidence in future growth. The Q&A section raised some concerns regarding Medicaid reimbursements, but overall sentiment remained positive, particularly with the expected FFO growth and base rent increase. The ATM program and increased liquidity are also favorable. While there are risks like regulatory issues and debt management, the optimistic guidance and shareholder return plan, coupled with a strong dividend history, suggest a positive stock price movement in the near term.
STRW Report
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