Good morning. My name is Ali and I will be your conference Operator today. At this time, I would like to welcome everyone to the Strawberry Fields REIT third quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session. If you would like to ask a question during this time, you have to press the star key followed by the number one on your telephone keypad. I would now like to turn the conference over to Jeff Bajtner, our Chief Investment Officer. Sir, please go ahead.

Thank you and welcome to Strawberry Fields REIT’s third quarter 2024 earnings call. I am the Chief Investment Officer of the company and I focus on acquisitions and new deals, growing our operator base, and investor relations. On the call with me today are Moishe Gubin, our Chairman and CEO, and Greg Flamion, our CFO. On Friday, the company issued its 2024 third quarter results, which is available on the company’s Investor Relations website. Participants should be aware that this call is being recorded and listeners are advised that any forward-looking statements made on today’s call are based on management’s current expectations, assumptions and beliefs about Strawberry Fields REIT’s business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and may or may not reference other matters affecting the company’s business or the businesses of its tenants, including factors that are beyond its control. Additionally, references will be made during this call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures as well as an explanation and reconciliation of these measures to the comparable GAAP results included on the non-GAAP measure reconciliation page in our investment presentation. Now onto discussing Strawberry Fields REIT. While there are many current shareholders on the call, we also have new and prospective shareholders, and I’d like to share a little bit of background about the company. The story began 21 years ago when Moishe Gubin, our Chairman and CEO, and Michael Blisko, one of our directors, purchased their first skilled nursing facility in Indiana. Once they found success with that first facility, they quickly bought a second and a third. Over the next nine years, they grew from that one facility to 33 facilities in Illinois and Indiana. In 2015, with those 33 facilities, Strawberry Fields REIT was created, and the company has grown significantly since then. As of September 30, the company owns and leases 114 facilities in nine states with over 12,800 beds, and as we get closer to year end, we look forward to growing this number. As it relates to this past quarter, I wanted to share some key highlights. The company collected 100% of contractual rents. In July, the company filed a registration statement on Form S-3 with the Securities and Exchange Commission. In August, the SEC declared the registration statement effective and the company established an ATM program. Through this program, the company began selling shares to the public for the first time as we initially went public through a direct listing. These shares will be sold at the company’s discretion and the ATM program is expected to provide the company with additional financing flexibility by increasing the stock’s liquidity and facilitating growth. In August, the company completed the acquisition for two skilled nursing facilities with 254 licensed beds near San Antonio, Texas. The acquisition was for $15.25 million. The facilities are leased to the Tide Health Group, a new third party tenant in consulting. These properties will increase the company’s annual base rents by $1.525 million and include annual escalators of 3%. In September, the company completed the acquisition of a property near Nashville, Tennessee, comprised of an 83-bed skilled nursing facility and a 23-bed assisted living facility. The acquisition was for $6.7 million. The property was added to an existing tenancy master lease and will increase the company’s annual rents by $670,000. As part of this deal, the company issued the sellers $3.1 million of Strawberry Fields REIT stock as consideration for the deal. Subsequent to quarter end, the company acquired an 86-bed skilled nursing facility in Indianapolis, Indiana, marking our 115th facility. The acquisition was for $6 million. The facility was added to an existing Indiana master lease and will increase annual rents by $600,000. The company also entered into a purchase and sale agreement to acquire eight skilled nursing facilities with 1,111 licensed beds located in Missouri for $87.5 million. The facilities are currently leased under a master lease agreement to a group of third party tenants. Lastly, our board of directors authorized a cash dividend of $0.14 a share, which is an increase of $0.01 a share from the prior quarter’s dividend. The dividend will be payable on December 30, 2024, to shareholders of record on Monday, December 16, 2024. This dividend will be our ninth consecutive quarter paying dividends, and in that time it will be our fourth increase. This represents a philosophy of the company to teach the market that our dividends can be relied upon. I would now like to have Greg Flamion, our Chief Financial Officer discuss the quarterly financials.

Thank you, Jeff. Good morning and welcome again to the Strawberry Fields third quarter earnings call. Starting off, we will discuss the quarterly comparison of the balance sheet as of September 30, 2024 versus the balance sheet as of the prior quarter at June 30, 2024. Total assets are $661.5 million, which is $25.7 million or 4% higher than June 30, 2024. This increase is driven by real estate investments from the five properties we acquired during the quarter, as well as higher cash balances from the Series A bond raise that occurred in August 2024. This was offset by lower right of use assets, as well as lower restricted cash and equivalents. Liabilities are $606.3 million, which is an increase of $21.1 million or 3.6% from the prior quarter. The increase is due to the Series A bond raise that was mentioned earlier. The liability increase was offset by lower accounts payable and lower operating lease liabilities. Equity for the quarter was $55.2 million, $4.6 million or 9.4% higher than the previous quarter. The increase is due to the higher third quarter net income and the sale of additional common stock, offset by third quarter dividend distributions. Moving to our next comparison, we are reviewing an analysis of the balance sheet as of September 2024 versus September 2023. Total assets are $31.7 million or 5% higher than the prior year. This increase is due to the cash and cash equivalents as well as higher goodwill, other intangible assets, and lease rights. The lease right increase is due to the purchase of the Indiana master lease to lease rights in February of this year. Liabilities increased $30.4 million or 5.3% from September 30, 2023. The higher liability balance is driven by an increase of 46.6% in net bonds offset by lower notes payable and other debt, as well as lower accounts payable and accrued liabilities. Equity is $55.2 million as of September 2024. This is $1.3 million or 2.5% higher than September 30, 2023. The increase is driven by higher net income, a net increase in common stock, and these increases were offset by higher dividend distributions and negative foreign currency-related adjustments. Moving onto the next comparison, we are now discussing the quarter-to-date income statement comparison of Q3 2024 versus Q2 2024. The third quarter net income is $6.9 million, which is marginally lower than the net income from the prior quarter. Third quarter revenues and expenses were mostly in line with the second quarter; however, the quarterly change is due to slightly higher interest expense that was offset by lower G&A expenses. Moving to the year-to-date P&L comparison, September 2024 year-to-date net income is $19.9 million, which is $5.5 million or 37.8% higher than the year-to-date net income in September 2023. This increase is driven by higher revenue due to new properties acquired in the trailing 12 months, offset by higher operating expenses and higher interest expenses. This concludes the review of the financial statements in the presentation. Jeff Bajtner will now discuss our current investment strategy.

Thank you everyone for being here today. This is our second earnings call, and we're still refining our process. As many of you know, we're straightforward people, so I’d like to guide you through the presentation that's available on our website, which we’ll probably publish today. It's important to note that our financial statements are based on GAAP accounting, reflecting a lower historical cost for our products, which leads to an undervaluation of our assets. Currently, our enterprise value is approximately $1.2 billion, and as Greg mentioned, our assets on a GAAP basis amount to around $661 million after depreciation. We expect to close on another $110 million in assets in the fourth quarter, bringing our enterprise value to about $1.3 billion. We have a substantial amount of cash and are utilizing the ATM to raise more, which is beneficial for attracting shareholders and institutional stock purchases. In the long run, the ATM should be an effective tool for managing our stock price with the assistance of our investment bankers. Moving to the revenue, our numbers remain stable due to our straight-line rents, where we average the lease total over the duration of the lease period. Given this, we anticipate an increase in new assets to drive our revenue up to about $31 million, which should lead to approximately $125 million next year, assuming no further deals in 2025, though that scenario is unlikely. Our expenses have remained steady; I believe our management costs are lower than most other REITs, with total overhead under $2 million annually, which we expect to maintain. For next year, we're projecting a top-line revenue of about $125 million based on current expectations, with funds from operations likely reaching around $75 million. Our approach to dividends has been consistent, so we made a small increase, focusing on gradual growth. On the map slide, you can see our properties concentrated in the Midwest, with ongoing acquisitions in Missouri, Kansas, Texas, and Oklahoma aimed at expanding our portfolio. Our investment strategy prioritizes master leases, allowing us to add more assets or acquire substantial portfolios easily. We’re only looking at acquisitions through third-party operators unless they align with existing master leases. We have achieved a 13% growth rate in FFO, moving from $30 million in 2019 to $57 million anticipated in 2024, with projections of over $75 million for next year. Our base rent has also increased from $72 million in 2019 to an expected $125 million. Regarding our financial structure, we maintain a conservative payout ratio of 47%, which covers our net income while the remainder is reinvested in new assets. Our debt levels aim to stay around 50%, historically fluctuating between 45% and 55%. We’re gaining recognition in the market, and I believe once we are valued appropriately, we can explore further stock sales to reduce debt even more. Currently, equity is the most cost-effective capital source for us. I’m also pleased that our growth projections suggest a real growth rate of around 12%, providing solid returns for our shareholders. While some investors focus on dividends, I believe the stock price will rise as profitability increases. As of October 1, 2023, our stock price has grown significantly, reflecting progress toward its true market value. In terms of debt management, approximately 40% to 45% of our total debt is long-term HUD financing, with other loans transitioning to similar terms. Our leverage ratio is close to 50%, contingent upon capitalization rates assessed against our assets. This wraps up my portion of the presentation, and I appreciate your time. Now, we can open the floor for any questions.

Thank you. Ladies and gentlemen, the floor is open for questions. Thank you. Our first question is coming from Barry Oxford with Colliers. Your line is live.

Great guys, thanks for taking my question. You guys had mentioned a 10% cap rate. I was wondering if there’s any spread differential in cap rates versus the region, i.e., midwest versus the sunbelt region. Is there a difference in cap rate, or are the cap rates pretty close to each other, regardless of whether it’s a midwest or sunbelt?

Thank you, Barry, I appreciate you. Thanks for joining us today, and I appreciate the question. This is Moishe - I’ll answer that. I guess one of the things that differentiates us from our peers is I’m the founder; my partner Michael founded the company with me 21 years ago. Because of that, I’ve been relatively, I won’t say risk-averse because we’ve grown consistently, but we’ve been very regimented and disciplined in how we buy. Our 10% cap purchase is either feast or famine - some years we don’t do any deals; other years we do plenty of deals, but our math remains the same. We’re basically looking at the last three years’ financials with certain adjustments. Our background is nursing home operators, and no matter where the home is, whether it’s in the sunbelt or whether it’s in the rust belt, we’re examining the math to ensure that we’re starting with a tenant making a 1.25 coverage of the rent, and where we’re earning 10% on our money unlevered, and then we add leverage and manage our balance sheet. So yes, we don’t see a difference because we don’t make many policy exceptions. We treat this company similar to how I handle my bank, OPHC, and that is I don’t make many policy exceptions. We operate following strict policies, and we ensure that day one, tenants are making money while we achieve our 10% return, and we check off all the necessary boxes consistently. You might ask a better question, should we change it? That question could have been asked a year or two ago when the interest rates were on the rise, and my answer back then was, well, I don’t worry about that because we’re in this for the long run. Even if on day one the 10% unlevered margin is what we capture, and then we aren’t able to leverage at such great rates because of interest rates, it doesn’t matter because we plan on holding that asset for a minimum of 10, 20, or 30 years, and we should be able to refinance it at some point with HUD debt or similar instruments. We manage our balance sheet effectively, and that’s our practice.

Thank you for the insight on that. The fundamentals in the industry also appear to be quite strong. You had an occupancy rate of 70.4. How do you envision that evolving in 2025? Is it possible to increase occupancy significantly beyond this level?

There comes a time when we start to see some frictional vacancy. Our portfolio has two sides; we have larger cities like Chicago and, to a lesser degree, Indianapolis, Louisville, and Little Rock. These facilities have recovered post-COVID due to the volume of patients. Families often prefer not to care for their loved ones at home, and in larger cities, it is tougher to find suitable licensed facilities. Conversely, many of our properties are situated in rural areas, including picturesque spots like the Smoky Mountains, where long-term residents have diminished, and recovery has been slower. In urban areas, our occupancy rates are now higher than pre-COVID levels, nearing 80% to 90%, while rural occupancy is around 60%, gradually improving due to lower admission and discharge rates. I believe occupancy will rise. The impact of census occupancy on operators' financials will strengthen, particularly with the new administration. One of the initial changes after the president-elect took office was the elimination of the CMS staffing mandate, which would have greatly affected the nursing home sector, contingent on states increasing revenue. So yes, occupancy has the potential to rise. The trends in our tenants' businesses are encouraging; the aging baby boomer demographic plays a part. Typically, a Republican administration is less aggressive towards social programs, and the regulatory climate for nursing homes has been tough in recent years. The current administration has substantially raised fines across the sector. Having been in this field since graduating college in 1998, I can confidently say that the last four years have been particularly difficult. However, there is hope for positive change on the horizon. Our aim is to collect rents and ensure our tenants adequately care for their residents; increased revenue for them enhances their capability to provide that care.

Perfect, all of that makes sense. Going to the dividend, 47% payout, you alluded to that it’s 100% of net income. Is it fair to say that going forward, you’re going to have to adjust the dividend to essentially mirror the growth rate of the FFO, or not necessarily?

No, that’s exactly right. My intention is to maintain good governance, so I'm not a dictator. We take into account cash flow and what is necessary for shareholder satisfaction and performance. Yes, it's very likely that as our funds from operations increase, we will see the dividend grow in line with that increase. It’s possible that we may become large enough and have favorable capital conditions that allow me to raise equity capital at a good rate. If that happens, I might consider practices similar to other companies with a payout ratio of around 90%. However, I've resisted that instinct; nonetheless, I’m learning as we grow. I understand the importance of attracting liquidity and meeting investor expectations. While I prioritize cash flow, I want to avoid diluting equity unless it aligns with generating quality returns. The goal of enhancing earnings will always remain the top priority.

When you assess your stock price and take in your 10% cap rate, aren’t the numbers aligning beneficially?

Yes, yes, yes. We’re selling stock above NAV, but it’s critical to point out that I’m speaking in terms of EPS, accretive to earnings per share. If I don’t deploy the capital effectively once received, I need to ensure I am investing that money wisely—either reducing debt or acquiring assets that yield returns. Exactly. I must ensure that the marketplace comprehends my strategy. I aim to be transparent about our activities because at the end of the day, to attract new shareholders, they consider not only our stock performance but also our consistent financial management. I’d say our business is largely insulated from economic downturns. We are involved in a market where decisions are often not optional; if your mother requires a nursing home, you must take action. That sentiment drives our industry demand, which remains steady even amid financial uncertainty. Nursing homes have steadfast needs and commitments—they pay the rent, and we see a solid record of 100% rent collection year after year for 20 years. I often joke that if we had an accounts receivable staff, they’d have the easiest jobs in the world since we receive all our rents right at the start of each month. I may have veered off topic, but I believe I have addressed your inquiry.

You did, and I appreciate the time you took. I’ll yield the floor now. Thanks, guys.

Thanks, Barry.

Thank you. Our next question is coming from Gaurav Mehta with Alliance Global Partners. Your line is live.

Yes, good morning. Thank you for taking my question. I wanted to ask you about the portfolio that you have under contract. Just to clarify, the consultant on that portfolio is not Infinity but another third party?

Correct, and Gaurav, thank you for your time, thank you for joining us today, and thank you for your continued interest. That being said, yes, in our current philosophy, every new deal in new locations is entirely non-related party. This is no different. This new consultant is a seasoned operator running nursing homes for 30 years; he resides locally in Creve Coeur, and yes, it’s a completely arm’s length transaction with excellent coverage ratios day one and strong sponsor support. It’s a quality deal that adds a new operator in a new state, completely unrelated to me.

Okay. I think in your prepared remarks, you mentioned a number, $75 million of AFFO, is that for next year 2025 that you’re expecting?

Yes.

Okay, and that includes all the 4Q acquisitions that you expect to close, right?

Yes, we are currently under wraps on a few deals. We didn’t announce a bunch, but we have the $87.5 million deal in Missouri, a $24 million deal in Kansas, and a $5 million deal in Oklahoma, among others. If you total those amounts, we should end the year strong, and the $75 million estimate is based on those acquisitions. Again, we anticipate exceeding that total as we’re likely to discover additional acquisitions next year as well.

Okay, great. Maybe last question, earlier in your remarks, you talked about some of the changes you’re expecting from the new administration. I was hoping if you could discuss your view on any impact you’re expecting on Medicaid reimbursements or any other reimbursements, any expected impact on your business.

Well, over the years, and as part of doing non-deal roadshows for so long that I’ve been involved with, I’ve devoted considerable time towards educating shareholders, analysts, or anyone interested in our business. Title XVII and Title XVIII of the Social Security Act stipulate that the government, under Medicaid, is obliged to reimburse the costs incurred in operating nursing homes. So, the issue is, over time—and particularly during COVID, which we hope never arises again—certain states have fallen behind on their reimbursement rates. Toward the end of 2024, we began to see improvement in some states like Kentucky, Ohio, and maybe Texas. However, reimbursement rates for Indiana, Tennessee, and others have historically lagged, thus increasing rates occur a year after the expenses are incurred. On the Medicaid side, ideally, the program should be in sync with current operational needs. The Medicare side, however, has remained relatively stable over the last few years, aside from some transitional adjustments. We anticipate steady raises of 3-5% annually for nursing homes under Medicare. This is primarily the summary of my perspective. If anyone wants further details, I would be glad to provide even more insights.

All right, that’s all I had. Thanks for taking my questions.

Thanks, Gaurav.

Thank you. Once again ladies and gentlemen, if you have any further questions or comments, please press star, one on your telephone keypad at this time. Okay, as we have no further questions in queue at this time, I’d like to hand back to Mr. Gubin for any closing remarks.

Yes, I appreciate everyone taking time out of their lives, especially at the market's opening to spend with us. I genuinely believe that our stock will make you all proud in the long run. We’re slow and steady, consistently delivering results while focusing on net income growth and enhancing FFO per share. God willing, we’ll continue to substantiate these claims, quarter after quarter. Thank you for your time, and have a wonderful day.

Thank you. Ladies and gentlemen, this does conclude today’s call. You may disconnect your lines at this time and have a wonderful day, and we thank you for your participation.