Strawberry Fields Reit's Pipeline Contradictions: SNF Focus vs. Diversified Healthcare Hints

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Date of Call: Aug 7, 2026

Financials Results

• Revenue: $40M for Q2 2026, up $2.2M compared to Q2 2025; year-to-date revenue $80M, up 6.4% YOY
• EPS: $0.33 per share for first half year, up from $0.29 per share for the six-month ended Q2 2025

Guidance:

• Expect to close the hospital campus acquisition in Missouri during Q3 2026.
• Hopeful that Q4 will be a busy quarter for deal closings.
• Expect to close between $100M and $150M of deals for the year, though timing has shifted to later in the year.
• Projected AFFO per share growth of 10.1% for 2026.
• Expect to add at least one new state to the portfolio before year-end.
• Plan to pay off remaining corporate bonds in Q3 2026 using balance sheet cash and/or line of credit, maintaining below 50% leverage.

Business Commentary:

Financial Performance and Growth:

• Strawberry Fields REIT reported a revenue increase of 6.4% year-on-year in Q2 2026, with $40 million in revenues for the quarter.
• The increase was driven by the timing and integration of properties acquired in 2025, despite being offset by higher depreciation and general and administrative expenses.

Debt Restructuring and Financing:

• The company refinanced its existing secured bank debt with a new credit facility offering up to $300 million, comprising a $100 million term loan and a $200 million revolving line of credit.
• This restructuring was aimed at supporting acquisition growth and optimizing its debt structure, with the facility having a rate of SOFR plus 275.

Acquisition Activity and Pipeline:

• Strawberry Fields REIT signed a contract to acquire a hospital campus for $10.4 million, to be funded from the balance sheet and added to an existing master lease.
• The company's pipeline includes deals in existing and new states, with expectations to close some significant deals in Q4, indicating a hopeful outlook for acquisition growth.

Dividend and Shareholder Returns:

• The board of directors approved a dividend of $0.17 per share for Q3 2026, with a yield of 4.9% and an AFFO payout ratio of 50.6%.
• This reflects the company's commitment to providing consistent shareholder returns amidst market fluctuations.

Portfolio Valuation and Market Positioning:

• The company's portfolio is valued at over $1.4 billion, calculated using a conservative cap rate of 10% on annualized base rents of $143 million.
• With a focus on skilled nursing facilities, the company aims to close a valuation gap and align with peer averages, leveraging its strong AFFO growth rate of 11%.

Sentiment Analysis:

Overall Tone: Neutral

• Management acknowledges a 'pretty quiet quarter' and a 'weird year' with deal flow that was 'erratic' and 'wonky.' However, they express optimism about the pipeline, expecting Q4 to be busy and projecting continued slow and steady growth. They are confident in their strategy, dividend reliability, and eventual valuation improvement but are also candid about near-term challenges and a lack of growth in 2026.

Q&A:

• Question from Richard Anderson (Cantor Fitzgerald): When you think about You look like you’re projecting AFFO of $1.33 for this year. To what degree does that take into account any activity that you might close for the back half of this year, if at all? Is it because it’d be closing so late that it probably doesn’t have much of an impact on the numbers?
  Response: The $1.33 AFFO per share projection is based on current year performance and is expected to be incrementally increased by the closing of the Missouri acquisition in Q3, but later Q4 deals are not expected to have a significant impact.

• Question from Richard Anderson (Cantor Fitzgerald): The KC deal that is going to close in the third quarter has a hospital element to it. I think we kind of talked about this last quarter, but how open are you to sort of opportunities like that that are largely SNF but have some other stuff associated with them? Is that something that you feel adds to the risk profile of the investment?
  Response: The company is open-minded to diversified healthcare deals if they fit their box (e.g., connected to existing master lessees, manageable risk), but generally prefers pure-play SNF investments due to operational familiarity and ability to stabilize assets if needed.

• Question from Richard Anderson (Cantor Fitzgerald): I just wanted to ask back half of this year, Jeff, what’s the most that could be completed in that pipeline that you mentioned? You associated $12 million of FFO to it, what is that number? Is it $50 million, less, more?
  Response: The pipeline has a high likelihood of closing about $130M of real estate by year-end, with additional potential deals still in progress.

• Question from Mark Smith (Lake Street): Just wanted to ask a little bit about SG&A. I don’t know if you guys can quantify maybe how much of the SG&A step-up was one time in nature versus a new hire run rate.
  Response: The SG&A increase was about $800K in one-time closing costs, and an additional $250-$300K per quarter in ongoing salary costs, with the company currently fully staffed.

• Question from Mark Smith (Lake Street): Then I just want to ask big picture if you guys have seen many changes or anything different as you look at kind of the deal pipeline. It sounds like maybe you’re seeing some bigger deals come available and negotiating and looking at, curious kind of what you’re seeing out there in the market.
  Response: The deal pipeline is similar, with a focus on master leases in existing or new states; the company is evaluating a $250M standalone deal and other opportunities, but most activity remains consistent with past acquisition strategy.

• Question from Gaurav Mehta (Alliance Global Partners): I want to go back to your comments around the transaction market where you mentioned that you worked on some deals that didn’t close. Just want to get some more color on those deals that didn’t close. Did those deals go at a lower cap rate to your competitors? Why do you think those deals didn’t go through?
  Response: Deals that fell apart were not due to pricing or cap rates but due to seller concerns about employee turnover and operational transition during ownership changes, leading to a 'wonky' and challenging deal environment this year.

• Question from Gaurav Mehta (Alliance Global Partners): Second question on the balance sheet. You talked about debt maturity in third quarter, I think. Can you maybe provide some color on where you expect the cost of debt to be as you go to Israel to raise some debt?
  Response: The company plans to raise ILS (Israeli Shekels) to pay off higher-cost debt, expecting to save about 100 bps in interest, though they may realize a currency loss; the move aims to improve their blended interest rate.

• Question from John Massocca (B. Riley Securities): The 133 projection for AFFO in 2026, I know you talked about it a little bit earlier, but can you walk me through what exactly is kind of assumed in that number? Is that just-
  Response: The $0.33 per share AFFO projection is derived by annualizing the first half's performance, not based on a specific formula or forward assumptions beyond current results.

• Question from John Massocca (B. Riley Securities): Thinking about the prior conversation on issuing debt in the Israeli market, is there a size for the amount you’re looking to raise? I understand you do have a significant amount of capacity still on the revolver, but that would potentially be useful if, as and if some of this deal flow you’re talking about in the end of the year comes to fruition. How are you thinking about proceeds and how much of future investment volume maybe is financed with the revolver versus how much is financed with any additional capital you raise- with Israeli debt?
  Response: The company aims to raise a minimum of ILS 165M (~$55M) through a Dutch auction in Israel, potentially more if pricing is favorable, using the revolver for any difference; this provides flexibility for future acquisitions.

• Question from Kenneth Billingsley (Compass Point Research and Trading): I didn’t want your new slide to go unloved. I just want to clarify a comment. I might have misheard it. On the occupancy, somehow you had said that was high. I just wanted to clarify.
  Response: Occupancy of 77% is considered high for the company's portfolio in the Midwest, representing an improvement and supporting strong EBITDA coverage, though it is not comparable to portfolios in high-occupancy coastal states.

• Question from Kenneth Billingsley (Compass Point Research and Trading): Then on some of the comments you made about some of the new states, I know you said one of them is a new master lease and another one’s a one-off. Are these new partners or operators, or are they people you’re familiar with?
  Response: The new state deals involve operators the company is familiar with, including a sale-leaseback arrangement and a new portfolio in a new state, both expected to grow the company's presence.

• Question from Kenneth Billingsley (Compass Point Research and Trading): Then you talked about the potentials for partnering up, you threw out a number. I’m just curious. If you were to be partnering up, just with limited resources, would you focus primarily on those partnerships as opposed to acquisitions that you’ve sourced on your own? The reason I ask is based on the number you gave, are these partners, do they have similar size facilities, the debt being similar? I’m not asking you to get into all the detail, but could this be another 280 facilities that would- come onto the books if you were to partner with all these?
  Response: The company is in discussions to absorb peer operators into its platform, potentially diluting current ownership but creating a larger, perpetual business; within 10 years, management believes the company could grow four to five times its current size through such integrations.

Contradiction Point 1

Acquisition Pipeline Composition

Inconsistent messaging on whether pipeline includes non-SNF assets.

Richard Anderson (Cantor Fitzgerald) - Richard Anderson (Cantor Fitzgerald)

2026Q2: The company is open-minded to diversified healthcare deals (e.g., hospitals, CCRCs) if they fit the criteria. - Moshe Gubin(CEO)

Given the KC deal closing in Q3 includes a hospital component, how open are you to SNF-focused opportunities with additional elements? - Richard Anderson (Cantor Fitzgerald)

2026Q1: Most pending deals are skilled nursing facilities (SNFs), including opportunities in new states. - Moshe Gubin(CEO) and Jeff Bajtner(CIO)

Contradiction Point 2

Deal Execution Challenges

Contradictory explanations for deal losses to competitors.

Gaurav Mehta (Alliance Global Partners) - Gaurav Mehta (Alliance Global Partners)

2026Q2: The deals that fell through were not due to pricing or cap rate issues; they were due to wonky, random events related to the transition of ownership and operator changes. - Moshe Gubin(CEO)

Can you provide more details on the deals that didn’t close, including how their cap rates compared to competitors and the reasons for their failure? - Richard Anderson (Cantor Fitzgerald)

2026Q1: Competition from larger REITs has increased in the past year... The company has lost two deals to bigger competitors... The company maintains a disciplined buying model (10% cap, 10% cash-on-cash return) and will not change its approach to pay more. - Moshe Gubin(CEO)

Contradiction Point 3

AFFO per Share Projection Basis and 2026 Expectations

Inconsistent basis for AFFO projection and guidance for 2026.

Richard Anderson (Cantor Fitzgerald) - Richard Anderson (Cantor Fitzgerald)

2026Q2: The $1.33 AFFO per share projection is based on annualizing the current AFFO for the year. - Jeff Bajtner(COO) and Moshe Gubin(CEO)

To what extent does the $1.33 AFFO projection for this year account for potential activities in the back half of the year, and is their limited impact due to late closure? - Gaurav Mehta (Alliance Global Partners)

2025Q4: The AFFO per share run rate is expected to exceed the 2025 figure of $1.30. - Greg Flamion(CFO)

Contradiction Point 4

Acquisition Pipeline Dynamics and Deal Availability

Contradiction on whether the pipeline reflects available deals or is a moving target of select opportunities.

Richard Anderson (Cantor Fitzgerald) - Richard Anderson (Cantor Fitzgerald)

2026Q2: The pipeline now consists mostly of medium-to-high likelihood deals... Realistically, about $130 million of real estate could close by year-end, with additional deals still in the works. - Jeff Bajtner(CFO)

What is the maximum amount in the pipeline for the back half of this year associated with the $12 million FFO, and is it $50 million, less, or more? - Barry Oxford (Colliers Securities LLC)

2025Q3: The pipeline is a dynamic, moving target that includes deals at various stages (high, medium, low probability). It represents opportunities the company believes it can close, often through direct introductions from operators or owners. - Moshe Gubin(CEO)

Contradiction Point 5

Strategy on Using Equity for Future Acquisitions

Contradiction on openness to issuing equity versus preference for debt.

John Massocca (B. Riley Securities) - John Massocca (B. Riley Securities)

2026Q2: The company will likely use a combination of the Israeli debt issuance and the U.S. line of credit to fund the debt payoff. The company has multiple financing tools (including private placements and equity) to fund deals, providing flexibility. - Moshe Gubin(CEO)

How will proceeds be allocated, and what portion of future investment volume will be financed through the revolver versus new capital raises? - Mark Smith (Lake Street Capital Markets, LLC)

2025Q3: The CEO would love to raise capital but is hesitant due to the current stock price discount (~40%). He sees potential for a catalyst, like a large deal and roadshow, to improve liquidity. - Moshe Gubin(CEO)

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