Strawberry Fields REIT LLC (AMEX:STRW) Q4 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Total Revenue $117.3 million (up $17.3 million or 17.3% year-over-year), driven by full-year contributions from the Indiana two master lease acquired in Q3 2023 and revenue from additional acquisitions throughout 2024.
Total Expenses $55.8 million (up $3.4 million or 6.5% year-over-year), primarily due to higher depreciation and amortization costs along with increased general and administrative expenses.
Interest Expense $32.8 million (up $8.2 million or 33.4% year-over-year), reflecting additional expenses incurred to finance the company’s portfolio growth.
Net Income $26.5 million (up $6.3 million or 30.9% year-over-year), as revenue growth outpaced expenses.
Adjusted AFFO $55.8 million, demonstrating year-over-year growth with a compound annual growth rate of 12.6%.
Adjusted EBITDA $90.6 million, demonstrating year-over-year growth with a compound annual growth rate of 8.2%.
Total Assets $170 million (up 27.7% year-over-year), driven by significant portfolio expansion.
Total Liabilities $134.5 million (up 23.6% year-over-year), due to financing activities related to portfolio growth.
Equity $83.5 million (up $36 million or 76.8% year-over-year), reflecting successful capital raising efforts.
Dividend per Share $0.14 (up from $0.12 per share, representing a 16.6% increase in annual dividend distribution per share).
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Operating Highlights
Acquisitions in Canada: The company entered its first agreement for six healthcare facilities located in Canada, with a purchase price of $90 million.
Acquisition of Missouri Facilities: In December, the company completed an acquisition of eight healthcare facilities in Missouri for $87.5 million.
Portfolio Growth: The company grew its portfolio from 109 to 130 facilities, increasing the number of beds from 12,449 to 14,540, a 14% increase.
Base Rent Growth: Base rents increased from $84 million in 2020 to $104 million in 2024, with expectations to reach $130 million in 2025.
Lease Maturity: The average lease term increased from 4.6 years to 7.4 years.
Contractual Rent Collection: The company collected 100% of its contractual rents.
Public Offering: The company completed its first underwritten public offering of approximately 3.34 million shares, raising $35 million.
ATM Program: The company established an ATM program to sell shares to the public for the first time.
Debt Management: The company strategically reduced debt by paying down $24 million on a higher interest loan.
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Risk or Challenges
Competitive Pressures: The company is transitioning from a small, mom-and-pop operation to a more competitive entity, aiming to attract institutional investors and increase stock liquidity. This shift may expose the company to greater competitive pressures in the market.
Regulatory Issues: The company is navigating regulatory environments as it expands into new states and countries, which may present challenges in compliance and operational execution.
Supply Chain Challenges: The company has increased its portfolio significantly, which may lead to supply chain challenges in managing and maintaining the facilities across multiple states.
Economic Factors: The company faces economic uncertainties that could impact its growth and profitability, particularly in the context of rising interest rates and inflation affecting operational costs.
Debt Management: The company has increased its total liabilities by 23.6% to $134.5 million, raising concerns about debt management and the ability to service this debt amid rising interest expenses.
Lease Renewals: The company has several leases maturing in 2025, which poses a risk if tenants do not renew, potentially impacting cash flow.
Market Volatility: The stock price has experienced volatility, particularly after public offerings, which may affect investor confidence and market perception.
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Guidance & Outlook
Portfolio Growth: Acquired $130.3 million in grocery, 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 40, with 88% of facilities tied to master leases.
Lease Maturity: Average lease term increased from 4.6 years to 7.4 years, with 6 leases maturing in 2025.
Public Offering: Completed first underwritten public offering of approximately 3.34 million shares for total gross proceeds of $35 million.
Acquisitions: Acquired 8 healthcare facilities in Missouri for $87.5 million and 6 facilities in Canada for $90 million.
Revenue Expectations: Expect base rents to increase from $104 million in 2024 to approximately $130 million in 2025.
Dividend: Authorized cash dividend of $0.14 per share, representing a 16.6% increase from the previous year.
Debt Management: Plan to reduce debt by bringing in less expensive debt and selling shares through ATM to pay down debt.
Future Growth: Expect continued growth in AFFO per share and stable rent collection.
Stock Performance: Aim for stock to trade at a multiple of 13-14 times FFO.
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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 dividend payments: This will be the tenth consecutive quarter of paying a dividend.
Annual 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% with an AFFO payout of 49.5%.
Public offering: Completed its first underwritten public offering of approximately 3.34 million shares of common stock for total gross proceeds of $35 million.
ATM program: Established an ATM program to sell shares to the public.
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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 they maintain strict criteria for acquisitions and will only pursue deals that fit their strategy. Jeff Bajtner mentioned that deal flow is consistent from various regions, and they expect to close around $150 million this year.
Q:What are your leverage expectations as you look to grow in 2025?
A:Moishe Gubin indicated that their leverage mandate is between 45-55% equity, and they expect to be towards the low end of that range, with confidence in their ability to secure financing.
Q:Did you provide a forecast for 2025 AFFO per share?
A:Moishe Gubin mentioned an expected range of around $120 per share, but he expressed uncertainty and a desire to exceed that expectation.
Q:Can you discuss the status of your 2025 lease expirations?
A:Moishe Gubin confirmed that two leases are left, one is expected to renew, and the other will not, prompting them to seek a new tenant.
Q:What is driving the increase in Medicaid percentage in your 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: approximately 12.1 million diluted shares and 3.4 million RRP units.
Q:How significant was the ATM issuance in the fourth quarter?
A:Jeff Bajtner stated that they issued 71,000 shares, totaling roughly $161,000.
Q:Are you considering dispositions for future financing?
A:Moishe Gubin explained that their growth strategy is focused on current assets, and they are not currently considering dispositions.
Q:Do you have concerns about tenants moving out or lease expirations?
A:Moishe Gubin expressed that overall, he is not worried, except for a few assets in the Chicagoland market.
Q:How should we think about G&A as you grow your portfolio?
A:Moishe Gubin indicated that G&A should remain consistent with the fourth quarter run rate, with potential increases related to his compensation.
Q:What are your thoughts on the integration of newly acquired properties?
A:Moishe Gubin described the integration as seamless, with established relationships and processes in place.
Q:Are you seeing any changes in the types of deals you are looking at?
A:Moishe Gubin noted an increase in sale-leaseback opportunities compared to outright sales.
Q:Review of Unclear Management Responses
A:Management appeared to avoid giving a direct answer regarding the increase in Medicaid percentage in the 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
AMEX Transcript
Bed bed
CTO Thursday
Canada purchase
Form ATM
LLC AMEX
LLC acquisition
LLC contribution
LLC end
LLC environment
LLC rate
Missouri state
RFC ATM
Sir LLC
States facility
Transcript name
United States
bed agreement
beginning
belief LLC
conference Chief
dividend Chief
end line
expansion LLC
financing activity
healthcare facility
lease acquisition
lease term
option
portfolio expansion
portfolio facility
price facility
purchase price
tenant lease
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
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
