This article first appeared on GuruFocus .
Release Date: August 07, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Strawberry Fields REIT Inc ( STRW ) collected 100% of its contractual rents during Q2 2026.
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The company closed on a new corporate credit facility with availability up to $300 million, providing ample liquidity for growth.
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Strawberry Fields REIT Inc ( STRW ) has a strong acquisition pipeline, with deals in excess of $225 million and a potential $130 million in closings expected by year-end.
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The company maintains a low dividend payout ratio of approximately 50.6%, allowing for internal cash flow to fund accretive acquisitions.
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Strawberry Fields REIT Inc ( STRW ) reported strong tenant health with an EBITDA and rent coverage ratio of 2.17, indicating a secure income stream.
Negative Points
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Strawberry Fields REIT Inc ( STRW ) experienced a quiet quarter with slower-than-expected acquisition activity, pushing deal closings to the end of the year.
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The company's general and administrative expenses increased due to higher closing costs, corporate salaries, and other operating expenses.
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Strawberry Fields REIT Inc ( STRW ) faces currency translation risks related to its Israeli bond debt, with an unrealized loss sitting in accumulated other comprehensive income.
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The company's stock trades at a significant 40% discount to its peer average AFFO multiple, indicating a valuation gap.
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Strawberry Fields REIT Inc ( STRW ) encountered erratic deal-making conditions this year, with some contracted deals falling through and requiring renegotiation.
Q & A Highlights
Q: What is the most that could be completed from the deal pipeline in the back half of 2026, and what is the potential impact on AFFO? A: Jeff Beitner (CIO) stated that the pipeline is currently filled with a majority of deals rated "medium to high" likelihood of closing. Realistically, the company expects to close on at least $130 million of real estate towards year-end. Moishe "Mush" Schubin (Chairman and CEO) added that if all deals come to fruition, AFFO could increase from the current $74 million run-rate to approximately $81-$82 million, with a potential additional $12 million in AFFO for next year.
Q: Can you provide more color on the deals that didn't close this year? Was it due to pricing or other factors? A: Mush Schubin (CEO) explained that the failed deals were not due to pricing or cap rates, as the company maintained its disciplined 10-cap underwriting. Instead, the issues were operational and idiosyncratic, including sellers' fears of staff turnover during operator transitions, a deal falling apart due to a single person's refusal, and a bankruptcy court dispute where an outside party argued for a higher price, costing the company a couple million dollars more. He described it as a "strange year" with "wonky stuff" unrelated to market fundamentals.
Q: How open is the company to investment opportunities that include non-SNF assets, like the Kansas City hospital campus acquisition? A: Mush Schubin (CEO) said the company is open-minded but cautious. The Kansas City deal fits perfectly because it adds to an existing master lease with a current tenant who has the operational expertise to run the hospital alongside their existing physician practices. The company generally avoids standalone non-SNF assets because Schubin personally cannot operate a hospital if stabilization is needed. However, they are exploring CCRC deals where they can separate the components between two operators, acting as a referee between them.
Q: Can you quantify how much of the SG&A step-up was one-time in nature versus a new run-rate? A: Greg Flamian (CFO) clarified that approximately $800,000 of the increase was one-time closing costs associated with the new credit facility. The remaining increase is roughly $250,000 to $300,000 per quarter in higher corporate salaries, which is expected to be a continuing expense. The company is fully staffed and does not anticipate significant new hires unless a large deal closes, which would require adding one asset manager.
Q: What is the expected cost of debt for refinancing the September bond maturity, and what is the strategy regarding the Israeli bond market? A: Mush Schubin (CEO) explained that the company has about $160 million in Israeli shekel-denominated bonds at an average interest rate of 8%. The strategy is to raise new shekels to pay off the existing shekels, avoiding the realization of a currency loss sitting in OCI. The last Israeli bond deal was priced at 7%, and the company expects to improve its cost of debt from 8% to at least 7%. The trip to Israel in late August aims to raise a minimum of $55 million, with a maximum of $160 million, depending on pricing, and the remainder will be drawn from the revolver.
Q: Regarding the $1.33 projected AFFO per share for 2026, does this assume any benefit from deals closing in the back half of the year? A: Jeff Beitner (CIO) clarified that the $1.33 figure is simply the annualization of the first half's AFFO per share. The Missouri hospital acquisition closing in Q3 will have an incremental positive impact, but the larger deals expected to close in Q4 will not have a significant effect on 2026 AFFO. Mush Schubin (CEO) corrected an earlier misspeak, noting that the $12 million increase he mentioned referred to rental income, not AFFO, and that AFFO is expected to grow from $74 million to roughly $83 million.
Q: Have you seen any changes in the deal pipeline or market conditions, and are you seeing bigger deals come available? A: Jeff Beitner (CIO) said the market remains consistent, with deals coming in daily. The company focuses on growing master leases in existing states or entering new states where growth is possible. Mush Schubin (CEO) added that there are several larger deals in the works, including a potential $250 million standalone deal with a 50/50 chance of closing, and three separate groups that have been in discussions for one to two years about being absorbed into the company. He projected the company could add $4 billion in property value over the next 10 years through these types of partnerships.
Q: Can you provide more detail on the potential partnerships or absorptions you mentioned, and could they bring a significant number of facilities onto the books? A: Mush Schubin (CEO) clarified that these are not traditional partnerships but rather absorptions of smaller, privately held REIT-like entities. The owners would join the board and retain a residual interest, while Strawberry Fields would eliminate their overhead by integrating their asset management teams. He is confident that within 10 years, the company will be four to five times its current size through these types of transactions, which are driven by owners seeking liquidity and an exit without the burden of running a public company.
Q: You mentioned occupancy of 77% is "high." Can you clarify that comment? A: Mush Schubin (CEO) explained that occupancy is an efficiency-based metric and varies significantly by state. For example, Indiana has lower occupancy in the 60s but is the company's best-performing state with the highest rent coverage. The 77% figure is an improvement from the portfolio's historical 68-69% and reflects the strength of the Midwest markets where the company operates. He emphasized that the more important metric is the 2.17x EBITDAR rent coverage, which ensures the dividend is well-protected.
Q: Regarding the new states you mentioned, are these new operators or people you are familiar with? A: Mush Schubin (CEO) stated that while the company is familiar with the operators, they are brand new tenants. One deal is a sale-leaseback with a company that has been in business for over 20 years and is looking to free up working capital for growth. The other is a new portfolio in a new state with a new tenant that the
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
