Strawberry Fields REIT, Inc.
For the period ended Mar 31, 2025. Filed May 9, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 9, 2025
STRW$12.12-2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001493152-24-044262
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0001641172-25-009352
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 113 previous paragraphs and 99 current paragraphs.
53 unchanged; 23 reworded; 22 added; 37 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 5 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
On January 2, 2025, the Company closed the acquisition with an unaffiliated seller for the purchase of six healthcare Facilities located in Kansas. The purchase price for the Facilities was $24.0 million, payable at the closing. The Facilities were leased under a new 10-year master lease agreement to a group of third-party tenants. Under the master lease, (i) the tenants will be on a triple net basis and (ii) the tenants have 2 five-year options to extend the lease. The tenants operate the Facilities as five skilled nursing facilities and one assisted living facility. The six facilities are comprised of 354 licensed beds.
Current report
On April 4, 2025, the Company completed the acquisition for a skilled nursing facility with 112 licensed beds near Houston, Texas. The acquisition was for $11.5 million. The Company funded the acquisition utilizing cash from the balance sheet. The facility was leased to an existing third party operator and added to their Master Lease (Texas Master Lease 2). The initial annual base rents are $1.278 million dollars and subject to 3% annual rent increases.
Current report
Rental revenues: The increase in rental revenues of $9.5 million or 34.1% is primarily due to rental income received from the new Kentucky, Missouri, and Kansas master leases. These increases were offset by lower revenue from the Landmark master lease.
Current report
Depreciation and Amortization: The increase in depreciation of $1.5 million or 20.7% is related to depreciation on the 23 properties purchased in 2024 and Q1-2025. The increase was offset by assets that fully depreciated in 2024. Amortization increase of $1.7 million or 186.3% is due to additional intangible assets purchased in 2024 and rent receivable related to the Kentucky Master Lease.
Current report
*General and administrative:*Q1-2025 expenses increased by $657K or 42.6% compared to Q1-2024. The increase is driven by higher Q1-2025 professional fees, corporate salaries and other operating expenses.
Current report
Interest expense, net: The increase in interest expense of $4.9 million or 63.4% is primarily related to additional interest paid on higher bond balances, an additional note payable starting in Q1-2025 and a new third commercial bank loan facility obtained in connection with the December 2024 acquisition of the Missouri facilities.
Current report
Cash used for investing activities for the three months ended March 31, 2025 was $28.7 million. The consists of $29.0 million in real estate investments offset by a slight decrease in notes receivable. Cash used for investing activities for the three months ended March 31, 2024 mostly consists of a $18.0 million purchase of the replacement Indiana master lease. These properties were acquired in an acquisition completed in August of 2023.
Current report
Cash flows used for financing activities for the three months ended March 31, 2025 was $12.8 million dollars. The balance includes funds for $6.0 million in non-controlling interest distributions, $3.3 million in repayment of senior debt, $2.0 million for the repayment of notes payable, $2.0 million for OP unit retirements and $1.7 million in dividend payments on common stock. These cash outflows were offset by $2.2 million in ATM proceeds received in the quarter. Cash flows provided by financing activities for the three months ended March 31, 2024, were primarily comprised of $25.7 million proceeds from the issuance of Series D Bonds offset by $5.4 million for the distributions to non-controlling interest and the repayment of senior debt.
Current report
Commercial Bank Term Loans
Current report
On September 25, 2024, the Company acquired a property, located in Tennessee. As part of the acquisition of the property the Company assumed a $2.8 million dollar loan that previously existed on the property. The loan bears a fixed 6.25% annual interest rate. The loan term matures on April 23, 2026.
Current report
On December 19, 2024, the Company closed a mortgage loan facility with a commercial bank pursuant to which the Company borrowed approximately $59 million. The facility provides for monthly payments of interest and payment of principal and interest will start on January 2026 based on a 20-year amortization with a balloon payment due in December 2029. The rate is based on the one-month SOFR plus a margin of 3.0% and a floor of 4% (as of the March 31, 2025, the rate was 7.41%). As of March 31, 2025 and December 31, 2024, total outstanding principal amount was $59 million. This loan is collateralized by 8 properties owned by the Company. The loan proceeds were used to acquire the Missouri facilities. See note 4 of the financial statements included in Part I to this Form 10-Q.
Current report
As of March 31, 2025, the Company had outstanding Series A, Series C Bonds and Series D Bonds.
Current report
In November 2015, the Company, through a subsidiary, issued Series A Bonds in the face amount of NIS 265.2 million ($68 million) and received the net amount after issuance costs of NIS 251.2 million ($64.3 million). Since then the Company extended the series amount twice in September 2016 and May 2017 and received a combined net amount of $30.1 million. The Series A Bonds had an original interest rate of 6.4% per annum. The Series A Bonds were paid off on November 8, 2023.
Current report
In August 2024, Strawberry Fields, Inc completed, directly, an initial offering on the Tel Aviv Stock Exchange (“TASE”) of Series A Bonds with a par value of NIS 145.6 million ($37.1 million). The series A Bonds were issued at par. Offering and issuance costs of approximately $1.0 million were incurred at closing. In December 2024, the Inc company issued an additional NIS 145.6 million ($38.1 million) in Series A Bonds.
Current report
In September 2024 the Company made an exchange tender offer of outstanding Series D Bonds for Series A Bonds. The interest rate on Series D Bonds is 9.1% per annum. The exchange offer rate was 1.069964 Series A Bonds per Series D Bonds. As a result of this offer, 47.3 million NIS Series D Bonds ($12.7 million) were exchanged for 50.6 million NIS Series A Bonds ($13.6 million).
Current report
As of March 31, 2025, the outstanding balance of the Series A Bonds was NIS 322.8 million ($86.8 million),
Current report
As of March 31, 2025, the outstanding principal amount of the Series C Bonds was NIS 267.5 million ($71.9 million).
Current report
In September 2024 the Company made an exchange tender offer of outstanding Series D Bonds for Series A Bonds. The interest rate on Series D Bonds is 9.1% per annum. The exchange offer rate was 1.069964 Series A Bonds per Series D Bonds. As a result of this offer, 47,245,161 NIS Series D Bonds ($12.7 million) were exchanged for 50,550,621 NIS Series A Bonds ($13.6 million).
Current report
As of March 31 2025, the Series D Bonds had an outstanding principal balance of approximately NIS 187.2 ($50.5 million).
Current report
Note Payable
Current report
On January 1, 2025, the Company created a new Kentucky Master Lease with a new third-party operator. This master lease was created from 10 properties that were formally in the Landmark Master Lease. In order to release the properties from the Landmark Master Lease, the Company entered into a $50.9 million dollar note payable with the parent of the Landmark operator. The note is for equal monthly payments of $1.1 million dollars for 5 years and bears interest of 10.0%.
Current report
On April 4, 2025, the Company completed the acquisition for a skilled nursing facility with 112 licensed beds near Houston, TX. The acquisition was for $11.5 million. The Company funded the acquisition utilizing cash from the balance sheet. The facility was leased to an existing third party operator and added to their Master Lease (Texas Master Lease 2). The initial annual base rents are $1.3 million dollars and subject to 3% annual rent increases.
Removed paragraphs (37)
Previous report
On January 1, 2024, the Company commenced its lease for two skilled nursing facilities with 248 licensed beds near Johnson City, Tennessee. The lease includes a purchase option which the Company intends to exercise once certain conditions precedent are met. On August 30, 2024, the Company exercised its purchase option. The acquisition was for $4.0 million, and the Company funded the acquisition utilizing cash from the balance sheet. The properties were leased to Infinity, a related party operator. The rent for the properties did not change ($400 thousand per year) and the properties will be added to the Tennessee Master Lease 1.
Previous report
On February 8, 2024, the BVI Company issued additional Series D Bonds with a par value of NIS 100.0 million and raised a gross amount of $26.7 million (NIS 98.2 million). The Bonds were issued at a price of 106.3%; which equates to a coupon of approximately 7.7%.
Previous report
On February 20, 2024 the Company entered into a new, replacement master lease for the properties included in the Indiana acquisition completed in August of 2023. The tenants remain a group affiliated with two of the Company’s directors, Moishe Gubin and Michael Blisko. The new master lease has an initial term of ten years and is subject to 2 five-year extensions. The initial annual base rent for the properties is $14.5 million dollars and is subject to annual increases of 3%. In connection with the new master lease, the existing purchase option held by the tenant, which was granted by the prior owner of the properties, of $127.0 million was terminated. Consideration for the termination of the purchase option and inducement for entering into the new, replacement master lease was $18.0 million paid to the tenants. The $18.0 million payment was funded by cash and the proceeds from the additional Series D Bond issuance in February 2024.
Previous report
On March 25, 2024, the Company entered into a purchase agreement for a property comprised of a 68-bed skilled nursing facility and 10 bed assisted living facility near Georgetown, Indiana. The Company closed on the property May 31, 2024, for $5.83 million in an all cash transaction. The facility was leased to Infinity, a related party operator. On June 1 st, 2024, the facility was added to the IN Master Lease in the second amendment to the master lease.
Previous report
On April 1, 2024, the Company renewed the IN Master Lease (original expiration date July 31, 2025) for 10 years with two 5 years options and added to the lease one more entity that was not part of the original lease. The base rent for the first year is $15.5 million with 3% annual escalations. On June 1, 2024, a second amendment was filed with this Master Lease to include the new property purchased in Georgetown, Indiana.
Previous report
On April 30, 2024, the company sold a property 107 South Lincoln Street to The Village of Smithton, a municipality in Illinois and paid off the existing mortgage. The building was sold to the municipality for $1. The Company paid $1.2 million in related debt and closing fees for this transaction.
Previous report
On July 12, 2024, the Company filed a Registration Statement on Form S-3 with the Securities and Exchange Commission (“SEC”). On August 1, 2024, the SEC declared the Registration Statement effective. In connection with the Registration Statement the Company established an at-the-market equity program (the “ATM Program”). The ATM Program will allow the Company to issue and sell to the public from time to time, at the Company’s discretion, newly issued shares of common stock. The ATM Program is expected to provide the Company with additional financing flexibility and intends to use the net proceeds from the ATM Program to increase stock liquidity and facilitate growth.
Previous report
On August 5, 2024, the Company issued 145.6 million NIS in Series A Bonds on the Tel Aviv stock exchange (“TASE”), which is approximately $38.1 million. The bonds are unsecured, were issued at par and have a fixed interest rate of 6.97%. Repayment of the bond principal, at 6% of the principal, will be paid in the years 2024 and 2025, with the remaining 88% due in 2026. Interest payments will be due concurrent with the principal payments on September 30th of the years 2024, 2025 and 2026. In addition, the investors in Series D bond were offered to exchange their holdings with certificates of Series A bonds at a conversion rate of 1.069964 bond A for each certificate of bond D. As of September 30, 2024, 47.2 million NIS ($12.7 million USD) Series D bonds have been exchanged for 50.6 million NIS ($13.6 million) Series A bonds.
Previous report
On September 25, 2024, the Company completed the acquisition of a property comprised of an 83-bed skilled nursing facility and 23 bed assisted living facility near Nashville, Tennessee. The acquisition was for $6.7 million and the Company funded the acquisition by assuming $2.8 million of existing debt on the facilities, $3.1 million was paid by the Company issuing common stock to the seller, and another $0.8 million by transferring other assets to the seller. The property was leased to Infinity, a related party operator. The property annual rent is $670 thousand dollars and the property will be added to the Tennessee Master Lease 1.
Previous report
Rental revenues: The increase in rental revenues of $3.7 million or 14.3% is due to higher income from the purchase of additional properties and lease renewals.
Previous report
Depreciation and Amortization: The increase in depreciation and amortization of $1.1 million or 14.4% is primarily due to new properties and lease rights purchased since September 30, 2023 offset by lower depreciation from fully depreciated assets.
Previous report
Results of Operations (continued)
Previous report
Interest expense, net: The increase in interest expense of $725 thousand or 9.2% is primarily due to an increase in the additional interest on a new loan from Popular Bank, the Series A Bond issuance and a Series D Bonds issuance that occurred since 3Q 2023.
Previous report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023:
Previous report
Rental revenues: The increase in rental revenue of $12.2 million or 16.5% is due to renegotiation of certain leases, acquisition of new properties and renewal of leases.
Previous report
Depreciation and Amortization: The increase in depreciation and amortization of $3.4 million or 16.0% is primarily purchases of new properties and lease rights offset by lower depreciation from fully depreciated assets.
Previous report
*Loss on real estate investment impairment:*In February 2023, one facility under one of our southern Illinois master leases was closed. The closure was made at the request of the tenant and was mainly for efficiency reasons. This facility was leased under a master lease with two other facilities. The closure did not result in any reduction in the aggregate rent payable under the master lease, which was paid without interruption. However, the closure did result in a write off of the remaining book value of the property and an impairment loss on the P&L. On April 30, 2024, the company sold the property to The Village of Smithton, a municipality in Illinois, and paid off the outstanding mortgage. The sale of the property did not result in any material P&L impact.
Previous report
General and administrative: The increase in general and administrative of $1.1 million or 27.4% is primarily a result of higher insurance, higher corporate salaries and other expenses.
Previous report
Results of Operations (continued)
Previous report
Interest expense, net: The increase in interest expense of $6.0 million or 33.6% is primarily related to additional interest on a new loan from Popular Bank, a Series A bond issuance and a Series D bond issuance that occurred since the third quarter of 2023
Previous report
Miscellaneous Expense: The decrease in miscellaneous expense of $1.0 million is the result of a fee paid to an investment banking firm in connection with the cancellation of an agreement with respect to a proposed financing transaction.
Previous report
Net Income: The increase in net income to $19.9 million in 2024 from $14.5 million in same period last year (37.2% increase) is primarily a result of higher rental income in 2024 offset by higher interest expenses, higher depreciation and amortization expenses, higher general and administrative expenses, lower property taxes and the absence of a real estate impairment loss.
Previous report
Cash used in investing activities for the nine months ended September 30, 2024 was comprised of $43.0 million for the acquisition of the rights to the Indiana Master Lease 2 as well as 6 new properties in Indiana, Tennessee and Texas. This was offset by $0.8 million in principal payments on notes receivable. Cash used in investing activities for the nine months ended September 30, 2023 was comprised of the acquisition of 25 new facilities in Indiana and Kentucky for $108.1 million. There was also an increase of $6.5 million in note receivables, which was offset by $1.0 million of principal payments on notes receivable.
Previous report
Cash provided by financing activities for the nine months ended September 30, 2024 was comprised of proceeds from the issuance of Series A Bonds $37.1 million, Series D Bonds $25.7 million and proceeds of the ATM sales of $2.4 million. These increases were offset by non-controlling interest distributions of $17.2 million, bond principal repayments of $10.5 million, repayments of mortgage debt $10.1 million, dividend payments of $2.5 million and stock buybacks of $0.9 million. Cash provided by financing activities for the nine months ended September 30, 2023 were primarily comprised of a private placement of Series C Bonds which netted $10.9 million, issuance of Series D Bonds which netted $22.4 million, a private placement of Series D Bonds $19.1 million, a new HUD loan of $3.2 million and a commercial bank facility of $66 million. These amounts were offset by $15.3 million in principal debt payments, dividends paid to common shareholders of $2.1 million, a $15.2 million distribution to the non-controlling interest holders and repayment of non-controlling interest redemption liability of $15.8 million.
Previous report
Commercial Bank Term Loan
Previous report
On September 25 th, 2024, The Company assumed a $2.8 million dollar mortgage as part of the purchase of the Mabry property in Gainsborough, Tennessee. Principal and interest are due in monthly payments starting in October 2024. The loan interest rate is fixed at 6.25% and the balance is due on April 23 rd, 2026.
Previous report
The Company has issued Series A Bonds directly and Series C Bonds and Series D Bonds through the BVI company, a wholly owned subsidiary.
Previous report
Series A Bonds
Previous report
In August 2024, The Company completed an initial offering of Series A Bonds with a par value of NIS 145.6 million ($37.1 million). The Series A Bonds were issued at par. In addition, the investors in Series D bond were offered to exchange their holdings with certificates of Series A bonds at a conversion rate of 1.069964 bond A for each certificate of bond D. The Series A Bonds interest rate is 6.97%.
Previous report
As of September 30, 2024, the outstanding principal amount of the Series A Bonds was NIS 184.4 million ($49.7 million).
Previous report
As of September 30, 2024, the outstanding principal amount of the Series C Bonds was NIS 205.4 million ($55.4 million).
Previous report
As of September 30, 2024, the outstanding principal amount of the Series D Bonds was NIS 187.8 million ($50.6 million).
Previous report
The Series D Bonds are traded on the Tel Aviv Stock Exchange (TASE).
Previous report
The Company incurred a non-recurring expense of $1.0 million in the second quarter of 2023 in connection the cancellation of a contract with an investment banking firm related to a proposed financing.
Previous report
On October 8, 2024, the Company entered into a Purchase and Sale Agreement with an unaffiliated seller with respect to eight healthcare facilities located in Missouri. The purchase price for the facilities is $87,500,000, payable at the closing. The facilities are currently leased under a master lease agreement to a group of third- party tenants. Under the master lease, the tenants currently pay annual rent on a triple net basis. The eight facilities are comprised of 1,111 licensed beds. The Company plans to purchase the facilities utilizing the Company’s current working capital and funds provided by a third-party lender. The Company anticipates closing the acquisition before year-end; however, we can give no assurance that the closing will occur within this timeframe, or at all. The potential acquisition of the facilities is subject to substantial conditions to closing.
Previous report
On October 11, 2024 the Company acquired an 86-bed skilled nursing facility in Indianapolis, Indiana. The acquisition was for $6.0 million and the Company funded the acquisition utilizing cash from its balance sheet. The facility was added to an existing master lease with Infinity of Indiana.
Previous report
On October 14, 2024, the BVI Company issued additional Series C debentures with a par value of NIS 62.0 million ($16.5 million) and raised a gross amount of NIS 61.6 million ($16.4 million). The debentures were issued at a price of 99.3% to par.
Reworded paragraphs (23)
Previous wording
● risks and uncertainties related to the national, state and local economies, particularly the economies of Arkansas, Illinois, Indiana, Kentucky, Michigan, Ohio, Oklahoma, Tennessee and Texas, and the real estate and healthcare industries in general;
Current wording
● risks and uncertainties related to the national, state and local economies, particularly the economies of Arkansas, Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, Ohio, Oklahoma, Tennessee and Texas, and the real estate and healthcare industries in general;
Previous wording
Strawberry Fields REIT, Inc. (the “Company”) is engaged in the ownership, acquisition, financing and triple-net leasing of skilled nursing facilities and other post-acute healthcare properties. Currently, our portfolio consists of 104 healthcare properties with an aggregate of 12,889 licensed beds. We hold fee title to 103 of these properties and hold one property under a long-term lease. These properties are located in Arkansas, Illinois, Indiana, Kentucky, Michigan, Ohio, Oklahoma, Tennessee and Texas. We generate substantially all our revenues by leasing our properties to tenants under long-term leases primarily on a triple-net basis, under which the tenant pays the cost of real estate taxes, insurance and other operating costs of the facility and capital expenditures. Each healthcare facility located at our properties is managed by a qualified operator with an experienced management team.
Current wording
Strawberry Fields REIT, Inc. (the “Company”) is engaged in the ownership, acquisition, financing and triple-net leasing of skilled nursing facilities and other post-acute healthcare properties. Currently, our portfolio consists of 121 healthcare properties with an aggregate of 14,640 licensed beds. We hold fee title to 120 of these properties and hold one property under long-term leases. These properties are located in Arkansas, Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, Ohio, Oklahoma, Tennessee and Texas. We generate substantially all our revenues by leasing our properties to tenants under long-term leases primarily on a triple-net basis, under which the tenant pays the cost of real estate taxes, insurance and other operating costs of the facility and capital expenditures. Each healthcare facility located at our properties is managed by a qualified operator with an experienced management team.
Previous wording
We are entitled to monthly rent paid by the tenants and we do not receive any income or bear any expenses from the operations of such facilities. As of September 30, 2024, the aggregate annualized average base rent under the leases for our properties was approximately $109.2 million.
Current wording
We are entitled to monthly rent paid by the tenants and we do not receive any income or bear any expenses from the operations of such facilities. As of March 31, 2025, the aggregate annualized average base rent under the leases for our properties was approximately $134.9 million.
Previous wording
We elected a REIT status for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2022. We are organized in an UPREIT structure in which we own substantially all of our assets and conduct substantially all of our business through the Operating Partnership. We are the general partner of the Operating Partnership and as of the date of the report own approximately 14.2% of outstanding OP units.
Current wording
We elected a REIT status for U.S. federal income tax purposes commencing with our taxable year ended December 31, 2022. We are organized in an UPREIT structure in which we own substantially all our assets and conduct substantially all of our business through the Operating Partnership. We are the general partner of the Operating Partnership and as of the date of the report own approximately 22.7% of the outstanding OP units.
Previous wording
On August 30, 2024, the Company completed the acquisition for two skilled nursing facilities with 254 licensed beds near San Antonio, TX. The acquisition was for $15.25 million. The Company funded the acquisition utilizing cash from the balance sheet. The facilities are leased to the Tide Health Group, a 3 rd party operator. The properties are leased in the Texas Master Lease 2, which includes an annual base rent of $1.5 million dollars with 3% annual rent increases and an initial term of 10 years with two options of 5 year extensions.
Current wording
On March 31, 2025, the Company completed the acquisition for a skilled nursing facility with 100 licensed beds near Oklahoma City, Oklahoma. The acquisition was for $5.0 million. The Company funded the acquisition utilizing cash from the balance sheet. The facility was leased to an existing third party operator who entered into a Master Lease for this facility and the other facility acquired in December of 2024. The lease included annual base rents of $0.5 million dollars with 3% annual rent increases and an initial term of 10 years with two options of 5 year extensions.
Previous wording
As a landlord, the Company does not control the operations of its tenants, including related party tenants, and is not able to cause its tenants to take any specific actions to address trends in occupancy at the facilities operated by its tenants, other than to monitor occupancy and income of its tenants, discuss trends in occupancy with tenants and possible responses, and, in the event of a default, exercise its rights as a landlord. However, Moishe Gubin, our Chairman and Chief Executive Officer, and Michael Blisko, one of our directors, as the controlling members of 68 of our tenants and related operators, have the ability to obtain information regarding these tenants and related operators and cause the tenants and operators to take actions, including with respect to occupancy.
Current wording
As a landlord, the Company does not control the operations of its tenants, including related party tenants, and is not able to cause its tenants to take any specific actions to address trends in occupancy at the facilities operated by its tenants, other than to monitor occupancy and income of its tenants, discuss trends in occupancy with tenants and possible responses, and, in the event of a default, exercise its rights as a landlord. However, Moishe Gubin, our Chairman and Chief Executive Officer, and Michael Blisko, one of our directors, as the controlling members of 67 of our tenants and related operators, have the ability to obtain information regarding these tenants and related operators and cause the tenants and operators to take actions, including with respect to occupancy.
Previous wording
Net Income: The increase in net income from $4.7 million during the third quarter of 2023, to $6.9 million income during the third quarter of 2024 is primarily a result of higher rental income in the third quarter of 2024 offset by higher depreciation and amortization expenses, higher interest expense, lower general and administrative expenses, and lower property taxes.
Current wording
*Net Income:*The increase in net income from $5.9 million during the quarter ended March 31, 2024 to $6.9 million for the quarter ended March 31, 2025 is primarily due to increases in rental revenue offset by higher depreciation and interest expense.
Previous wording
As of September 30, 2024, we had cash and cash equivalents and restricted cash and equivalents of $53.2 million. We also had the ability to offer an additional $98 million in Series A, $144 million in Series C Bonds and an additional $108 million in Series D Bonds subject to compliance with covenants and market conditions.
Current wording
As of March 31, 2025, we had cash and cash equivalents and restricted cash and equivalents of $71.1 million. We also had the ability to offer an additional $61.1 million in Series A Bonds, $97.5 million in Series C Bonds and an additional $70.5 million in Series D Bonds subject to compliance with covenants and market conditions.
Previous wording
We may utilize various types of debt to finance a portion of our acquisition activities, including long-term, fixed-rate mortgage loans, variable-rate term loans and secured revolving lines of credit. As of September 30, 2024, on a condensed consolidated basis, we had total indebtedness of approximately $584.5 million, consisting of $264.1 million in HUD guaranteed debt, $155.7 million in Series A Bonds, Series C Bonds, and Series D gross bonds outstanding and $164.7 million in commercial mortgages loans. Under our bonds and our commercial mortgages loans, we are subject to continuing covenants, and future indebtedness that we may incur may contain similar provisions. In the event of a default, the lenders could accelerate the timing of payments under the debt obligations, and we may be required to repay such debt with capital from other sources, which may not be available on attractive terms, or at all, which would have a material adverse effect on our liquidity, financial condition, results of operations and ability to make distributions to our stockholders.
Current wording
We may utilize various types of debt to finance a portion of our acquisition activities, including long-term, fixed-rate mortgage loans, variable-rate term loans and secured revolving lines of credit. As of March 31, 2025, on a condensed consolidated basis, we had total indebtedness of approximately $715.5 million, consisting of $260.2 million in HUD guaranteed debt, $209.3 million in net Series A, Series C Bonds and Series D bonds outstanding, $197.2 million in commercial mortgages loans and $48.9 million in Notes Payable. Under our Bonds and our commercial mortgages loans, we are subject to continuing covenants. Future indebtedness that the Company may incur may contain similar provisions. In the event of a default, the lenders could accelerate the timing of payments under the debt obligations, and we may be required to repay such debt with capital from other sources, which may not be available on attractive terms, or at all, which would have a material adverse effect on our liquidity, financial condition, results of operations and ability to make distributions to our stockholders.
Previous wording
Through 2028 there are five balloon payment obligations consisting of a payment of $46.5 million due under Series A Bonds in 2026, $51.4 million due under the Series C Bonds in 2026, a payment of $47.2 million due under the Series D Bonds in 2026, a payment of $86.1 million due under our commercial bank mortgage loan facility due in 2027, and a payment of $60.7 million due under our commercial bank mortgage loan facility due in 2028. We may also obtain additional financing that contains balloon payment obligations. These types of obligations may materially adversely affect us, including our cash flows, financial condition and ability to make distributions.
Current wording
Through 2028 we will be required to make six balloon payments under our debt, consisting of a payment of $81.4 million due under our Series A Bonds in 2026, $66.9 million due under the Series C Bonds in 2026, a payment of $47.4 million due under the Series D Bonds in 2026, a payment of $86.1 million due under our commercial bank mortgage loan facility due in 2027 and a payment of $36.4 million due under our commercial bank mortgage loan facility due in 2028, and $52.2 million under our commercial bank mortgage loan facility due in 2029. We may also obtain additional financing that contains balloon payment obligations. These types of obligations may materially adversely affect us, including our cash flows, financial condition and ability to make distributions.
Previous wording
The Company believes that its overall level of indebtedness is appropriate for the Company’s business in light of its cash flow from operations and value of its properties and is generally typical for owners of multiple healthcare properties. The Company expects to generate sufficient positive cash flow from operations to meet its ongoing debt service obligations and the distribution requirements for maintaining REIT status.
Current wording
The Company believes that its overall level of indebtedness is appropriate for the Company’s business in light of its cash flow from operations and value of its properties and is generally typical for owners of multiple healthcare properties. The Company expects to generate sufficient positive cash flow from operations to meet its current debt service obligations and the distribution requirements for maintaining REIT status, and to be able to refinance its debt to the extent necessary to meet its balloon payment obligations.
Previous wording
Net cash provided by operating activities was $34.5 million for the nine months ended September 30, 2024 and primarily consisted of net earnings of $19.9 million adjusted by depreciation and amortization of $24.7 million offset by an increase in Accounts Receivable of $2.8 million, an increase in straight-line receivables of $3.0 million and a decrease in other accrued liabilities of $6.1 million. Net cash provided by operating activities was $42.0 million for the nine months ended September 30, 2023 and primarily consisted of net earnings of $14.5 million adjusted by depreciation and amortization of $21.3 million, a loss on real estate impairment of $2.5 million, and an increase in accounts payable and other accrued liabilities of $6.5 million.
Current wording
Net cash provided by operating activities for the three months ended March 31, 2025, was $19.0 million. This is comprised of net earnings of $7.0 million, depreciation and amortization of $11.3 million and a decrease in accounts payable, accrued liabilities and other liabilities of $1.9 million. These amounts were offset by an increase in straight-line rent of $1.5 million. Net cash provided by operating activities for the three months ended March 31, 2024, was $2.1 million. It was comprised of net earnings of $6.0 million and depreciation and amortization of $8.1 million, offset by a decrease in accounts payable and accrued liabilities and other liabilities of $8.1 million, an increase in other assets, and amortization of right of use assets.
Previous wording
As of September 30, 2024, we had non-recourse mortgage loans of $264.1 million from third party lenders that were guaranteed by HUD.
Current wording
As of March 31, 2025, we had non-recourse mortgage loans of $260.2 million from third party lenders that were guaranteed by HUD.
Previous wording
Each loan is secured by first mortgages on certain specified properties, interests in the leases for these properties and second liens on the operator’s assets. In the event of default on any single loan, the loan agreement provides that the applicable lender may require the tenants for the property securing the loan to make all rental payments directly to the lender. In exchange for the HUD guarantee, we pay HUD, on an annual basis, 0.65% of the principal balance of each loan as mortgage insurance premium, in addition to the interest rate denominated in each loan agreement. As a result, the overall average interest rate paid with respect to the HUD guaranteed loans as of September 30, 2024, was 3.91% per annum (including the mortgage insurance payments). The loans have an average maturity of 25.0 years.
Current wording
Each loan is secured by first mortgages on certain specified properties, interests in the leases for these properties and second liens on the operator’s assets. In the event of default on any single loan, the loan agreement provides that the applicable lender may require the tenants for the property securing the loan to make all rental payments directly to the lender. In exchange for the HUD guarantee, we pay HUD, on an annual basis, 0.65% of the principal balance of each loan as mortgage insurance premium, in addition to the interest rate denominated in each loan agreement. As a result, the overall average interest rate paid with respect to the HUD guaranteed loans as of March 31, 2025, was 3.91% per annum (including the mortgage insurance payments). The loans have an average maturity of 22.0 years.
Previous wording
On March 21, 2022, the Company obtained a mortgage loan facility with a commercial bank pursuant to which the Company borrowed approximately $105 million. The facility provides for monthly payments of principal and interest based on a 20-year amortization with a balloon payment due in March 2027. The interest rate is based on the one-month SOFR plus a margin of 3.5% and a floor of 4% (as of September 30, 2024 the interest rate was 8.42%). As of September 30, 2024 and December 31, 2023, total amounts outstanding were $95.1 million and $98.8 million, respectively. This facility loan is collateralized by 21 properties owned by the Company. The loan proceeds were used to repay the Series B Bonds and prepay commercial loans not secured by HUD guaranteed mortgages.
Current wording
On March 21, 2022, the Company closed a mortgage loan with a commercial bank pursuant to which the Company borrowed approximately $105 million. The loan agreement provides for monthly payments of principal and interest based on a 20-year amortization with a balloon payment due in March 2027. The rate is based on the one-month Secured Overnight Financing Rate (“SOFR”) plus a margin of 3.5% and a floor of 4% (as of March 31, 2025, rate was 7.91%). As of March 31, 2025 and December 31, 2024, total outstanding principal amount was $94.1 million and $95.1 million, respectively. This loan is collateralized by 21 properties owned by the Company.
Previous wording
On August 25, 2023, the Company closed a mortgage loan facility with a commercial bank pursuant to which the Company borrowed approximately $66 million. The facility is an interest only facility for the first 12 months and provides for monthly payments of principal based on a 20-year amortization starting in the second year with a balloon payment due in August 2028. The rate is based on the one-month Secured Overnight Financing Rate (“SOFR”) plus a margin of 3.5% and a floor of 4% (as of September 30, 2024, the rate was 8.42%). As of September 30, 2024 and December 31, 2023, total amounts outstanding were $65.3 million and $66.0 million, respectively. This facility loan is collateralized by and used for the acquisition of 19 properties (24 facilities).
Current wording
On August 25, 2023, the Company closed a mortgage loan facility with a commercial bank pursuant to which the Company borrowed approximately $66 million. The facility is an interest only facility for the first 12 months and beginning in the second year monthly payments of principal and interest based on a 20-year amortization schedule with a balloon payment due in August 2028. The rate is based on the one-month SOFR plus a margin of 3.5% and a floor of 4% (as of March 31, 2024, the rate was 7.91%). On December 17, 2024 the company paid down $24 million dollars of the outstanding loan. As of March 31, 2025 and December 31, 2024, total amounts outstanding were $41.3 million and $41.6 million, respectively. This facility loan is collateralized by and was used for the acquisition of 19 properties (24 facilities).
Previous wording
The loan agreement covenants consist of (i) a covenant that the ratio of the Company’s indebtedness to its EBITDA cannot exceed 8.0 to 1, (ii) a covenant that the ratio of the Company’s net operating income to its debt service before dividend distribution is at least 1.20 to 1.00 for each fiscal quarter as measured pursuant to the terms of the loan agreement, (iii) a covenant that the ratio of the Company’s net operating income to its debt service after dividend distribution is at least 1.05 to 1.00 for each fiscal quarter as measured pursuant to the terms of the loan agreement, and (iii) a covenant that the Company’s GAAP equity is at least $20.0 million. As of September 30, 2024, the Company was in compliance with the loan covenants.
Current wording
The two credit facilities closed in March 21, 2022 and August 25, 2023 are subject to financial covenants which consist of (i) a covenant that the ratio of the Company’s indebtedness to its EBITDA cannot exceed 8.0 to 1, (ii) a covenant that the ratio of the Company’s net operating income to its debt service before dividend distribution is at least 1.20 to 1.00 for each fiscal quarter as measured pursuant to the terms of the loan agreement (iii) a covenant that the ratio of the Company’s net operating income to its debt service after dividend distribution is at least 1.05 to 1.00 for each fiscal quarter as measured pursuant to the terms of the loan agreement, and (iii) a covenant that the Company’s GAAP equity is at least $20,000,000. As of March 31, 2025, the Company was in compliance with the loan covenants.
Previous wording
The Series A Bonds are traded on the Tel Aviv Stock Exchange (TASE).
Current wording
The Series A Bonds are traded on the TASE.
Previous wording
In July 2021, the BVI Company completed an initial offering of Series C Bonds with a par value of NIS 208.0 million ($64.7 million). The Series C Bonds were issued at par. During February 2023, the BVI Company issued additional Series C Bonds in the face amount of NIS 40.0 million ($11.2 million) and raised a net amount of NIS 38.1 million ($10.7 million). These Series C Bonds were issued at a price of 95.25%. The Series C Bonds interest rate is 5.7% at September 30, 2024.
Current wording
In July 2021, the BVI Company completed an initial offering of Series C Bonds with a par value of NIS 208.0 million ($64.7 million). The Series C Bonds were issued at par. During February 2023, the BVI Company issued additional Series C Bonds in the face amount of NIS 40.0 million ($11.3 million) and raised a net amount of NIS 38.1 million ($10.7 million). These Series C Bonds were issued at a price of 95.25%. In October 2024, the BVI company issued an additional NIS 62.0 million ($16.6 million) in Series C Bonds. The bonds were issued at 99.3%.
Previous wording
The Series C Bonds are traded on the Tel Aviv Stock Exchange (TASE).
Current wording
The Series C Bonds are traded on the TASE.
Previous wording
On June 19, 2023, the BVI Company completed an initial offering of Series D Bonds with a par value of NIS 82.9 million ($22.9 million). The Series D Bonds were issued at par and the interest rate is 9.1%. During July 2023, the BVI Company issued additional Series D Bonds with a par value of NIS 70.0 million and raised a gross amount of $19.2 million (NIS 69.8 million). The Bonds were issued at a price of 99.7%. On February 8, 2024, the BVI Company issued additional Series D Bonds with a par value of NIS 100.0 million and raised a net amount of $25.7 million (NIS 98.2 million). The Bonds were issued at a price of 106.3%.
Current wording
In June 2023, the BVI Company completed an initial offering of Series D Bonds with a par value of NIS 82.9 million ($22.9 million). The Series D Bonds were issued at par. During August 2023, the BVI Company issued additional Series D Bonds in the face amount of NIS 70.0 million ($19.2 million). These Series D Bonds were issued at a price of 99.7%. On February 8, 2024, the BVI Company issued additional NIS 98.2 million ($25.7 million) Series D Bonds. These Series D Bonds were issued at a price of 106.3%.
Previous wording
The following table reconciles our calculations of FFO and AFFO for the nine and three months ended September 30, 2024 and 2023, to net income the most directly comparable GAAP financial measure, for the same periods:
Current wording
The following table reconciles our calculations of FFO and AFFO for the three months ended March 31, 2025 and 2024, to net income the most directly comparable GAAP financial measure, for the same periods:
Previous wording
Our condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q have been prepared in accordance with GAAP for interim financial information set forth in the Accounting Standards Codification, as published by the Financial Accounting Standards Board. GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Please refer to “Critical Accounting Policies and Estimates” in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2023 Annual Report on 10-K filed on March 19, 2024 for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. There have been no material changes in such critical accounting policies during the nine months ended September 30, 2024.
Current wording
Our condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q have been prepared in accordance with GAAP for interim financial information set forth in the Accounting Standards Codification, as published by the Financial Accounting Standards Board. GAAP requires us to make estimates and assumptions regarding future events that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. We base these estimates on our experience and assumptions we believe to be reasonable under the circumstances. However, if our judgment or interpretation of the facts and circumstances relating to various transactions or other matters had been different, we may have applied a different accounting treatment, resulting in a different presentation of our financial statements. We periodically reevaluate our estimates and assumptions, and in the event they prove to be different from actual results, we make adjustments in subsequent periods to reflect more current estimates and assumptions about matters that are inherently uncertain. Please refer to “Critical Accounting Policies” in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2024 Annual Report on 10-K filed on March 13, 2025, for further information regarding the critical accounting policies that affect our more significant estimates and judgments used in the preparation of our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. There have been no material changes in such critical accounting policies during the three months ended March 31, 2025.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The credit facility that closed on December 19, 2024 is subject to financial covenants which consist of (i) a covenant that the ratio of the Company’s indebtedness to its EBITDA cannot exceed 8.0 to 1, (ii) a covenant that the ratio of the Company’s net operating income to its debt service before dividend distribution is at least 1.25 to 1.00 for each fiscal quarter as measured pursuant to the terms of the loan agreement (iii) a covenant that the ratio of the Company’s net operating income to its debt service after dividend distribution is at least 1.05 to 1.00 for each fiscal quarter as measured pursuant to the terms of the loan agreement, and (iii) a covenant that the Company’s GAAP equity is at least $30,000,000 As March 31, 2025, the Company was in compliance with the loan covenants.