UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________________ to __________

Commission File Number: 001-41628

Strawberry Fields REIT, Inc.

(Exact name of registrant as specified in its charter)

Maryland		84-2336054
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

6101 Nimtz Parkway, South Bend, IN, 46628

(Address of principal executive offices)

(574) 807-0800

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12 (b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		STRW		NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 6,356,856 shares of common stock, $0.0001 par value, issued and outstanding as of May 15, 2023.

STRAWBERRY FIELDS REIT, INC.

FORM 10-Q

March 31, 2023

TABLE OF CONTENTS

		Page No.
PART I	Financial Information	3

Item 1.	Condensed Financial Statements of Strawberry Fields REIT, Inc.:	3
	Condensed Consolidated Balance Sheets March 31, 2023 (unaudited) and December 31, 2022	3
	Condensed Consolidated Statements of Income and Comprehensive Income (unaudited) three months ended March 31, 2023 and 2022	4
	Condensed Consolidated Statements of Equity (unaudited) three months ended March 31, 2023 and 2022	5
	Condensed Consolidated Statements of Cash Flows (unaudited) three months ended March 31, 2023 and 2022	6
	Notes to Condensed Consolidated Financial Statements March 31, 2023 (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44

Item 4.	Controls and Procedures	45

PART II	Other Information	46

Item 1.	Legal Proceedings	46

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47

Item 6.	Exhibits	47

	Signatures	48

PART I – FINANCIAL INFORMATION

Item 1 - Financial Statements

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in $000’s, except share data)

	March 31, 2023		December 31, 2022
	(unaudited)
Assets
Real estate investments, net	$	436,229	$	438,911
Cash and cash equivalents		32,396		20,197
Restricted cash and equivalents		20,530		25,507
Straight-line rent receivable, net		24,025		23,534
Right of use lease asset		1,755		1,833
Goodwill, other intangible assets and lease rights		10,875		11,632
Deferred financing expenses		5,661		5,791
Notes receivable, net		17,942		19,419
Other assets		155		176
Total Assets	$	549,568	$	547,000

Liabilities
Accounts payable and accrued liabilities	$	10,880	$	13,723
Bonds, net		82,977		74,412
Notes payable and other debt		378,242		381,003
Operating lease liability		1,755		1,833
Other liabilities		9,979		10,892
Non-controlling interest redemption liability		15,593		15,753
Total Liabilities	$	499,426	$	497,616
Commitments and Contingencies (Note 8)		-		-
Equity
Common stock, $.0001 par value, 500,000,000 shares authorized, 6,365,856 shares issued and outstanding		-		-
Preferred stock, $.0001 par value, 100,000,000 shares authorized, 0 shares issued and outstanding	$	-	$	-
Additional paid in capital		5,792		5,792
Accumulated other comprehensive income		663		386
Retained earnings		1,403		1,608
Total Stockholders’ Equity	$	7,858	$	7,786
Non-controlling interest	$	42,284	$	41,598
Total Equity	$	50,142	$	49,384
Total Liabilities and Equity	$	549,568	$	547,000

See accompanying notes to Condensed Consolidated financial statements.

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(unaudited)

(Amounts in $000’s, except share and per share data)

	2023			2022
	Three Months Ended March 31,
	2023			2022

Revenues
Rental revenues	$	24,247		$	22,959

Expenses:
Depreciation	$	6,231		$	6,526
Amortization		757			757
Loss on real estate investment impairment		2,451			-
General and administrative expenses		1,462			2,590
Property taxes		3,718			2,944
Facility rent expenses		136			131
Provision for doubtful accounts		-			250
Total expenses		14,755			13,198
Income from operations	$	9,492		$	9,761

Interest expense, net	$	(4,808	)	$	(4,489	)
Amortization of deferred financing costs		(130	)		(57	)
Mortgage insurance premium		(415	)		(431	)
Total interest expense	$	(5,353	)	$	(4,977	)
Other loss:
Foreign currency transaction loss		-			(10,100	)
Net income (loss)	$	4,139		$	(5,316	)
Less:
Net income (loss) attributable to non-controlling interest		3,644			(4,731	)
Net income (loss) attributable to common stockholders		495			(585	)
Other comprehensive income:
Unrealized gain on foreign currency translation		2,318			4,974
Reclassification of foreign currency transaction losses		-			10,100
Comprehensive income attributable to non-controlling interest		(2,041	)		(13,416	)
Comprehensive income	$	772		$	1,073
Net income (loss) attributable to common stockholders	$	495		$	(585	)
Basic and diluted income (loss) per common share	$	0.08		$	(0.10	)
Weighted average number of common shares outstanding		6,365,856			5,849,746

See accompanying notes to Condensed Consolidated financial statements

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Amounts in $000’s)

	Number of common shares		Additional Paid-in Capital		Accumulated other comprehensive (loss) income			Retained Earnings / (Accumulated Deficit)			Non- controlling interest			Total
Balance, December 31, 2021		5,849,746	$	4,327	$	(2,455	)	$	393		$	32,785		$	35,050
Net change in foreign currency translation (unaudited)		-		-		1,658			-			13,416			15,074
Net loss (unaudited)		-		-		-			(585	)		(4,731	)		(5,316	)
Balance, March 31, 2022 (unaudited)		5,849,746	$	4,327	$	(797	)	$	(192	)	$	41,470		$	44,808

Balance, December 31, 2022		6,365,856	$	5,792	$	386		$	1,608		$	41,598		$	49,384
Balance		6,365,856	$	5,792	$	386		$	1,608		$	41,598		$	49,384
Dividends (unaudited)		-		-		-			(700	)		-			(700	)
Non-controlling interest distributions (unaudited)		-		-		-			-			(4,999	)		(4,999	)
Net change in foreign currency translation (unaudited)		-		-		277			-			2,041			2,318
Net income (unaudited)		-		-		-			495			3,644			4,139
Net income (loss)		-		-		-			495			3,644			4,139
Balance, March 31, 2023 (unaudited)		6,356,856	$	5,792	$	663		$	1,403		$	42,284		$	50,142
Balance		6,356,856	$	5,792	$	663		$	1,403		$	42,284		$	50,142

See accompanying notes to Condensed Consolidated financial statements

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in $000’s)

	2023			2022
	Three Months Ended March 31,
	2023			2022

Cash flows from operating activities:
Net income (loss)	$	4,139		$	(5,316	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		6,988			7,283
Amortization of bond issuance costs		45			250
Loss on real estate investment impairment		2,451			-
Amortization of deferred financing costs		130			57
Decrease (increase) in other assets		21			(4,261	)
Amortization of right of use asset		78			73
Foreign currency transaction loss		-			10,100
Foreign currency translation adjustments		449			458
Increase in straight-line rent receivables		(491	)		(494	)
Decrease in accounts payable and accrued liabilities and other liabilities		(3,756	)		(10,808	)
Repayment of operating lease liability		(78	)		(73	)
Net cash provided by (used in) operating activities	$	9,976		$	(2,731	)

Cash flow from investing activities:
Purchase of real estate investments	$	(6,000	)	$	-
Principal payments of notes receivable		1,477			162
Net cash (used in) provided by investing activities	$	(4,523	)	$	162

Cash flows from financing activities:
Proceeds from notes payable and other debt	$	-		$	104,102
Proceeds from issuance of bonds		10,389			-
Repayment of bonds		-			(91,768	)
Repayment of notes payable and other debt		(2,761	)		(23,702	)
Partial repayment of non-controlling interest redemption liability		(160	)		-
Payment of dividends		(700	)		-
Non-controlling interest distributions		(4,999	)		-
Net cash provided by (used in) financing activities	$	1,769		$	(11,368	)
Increase (decrease) in cash and cash equivalents and restricted cash and equivalents	$	7,222		$	(13,937	)
Cash and cash equivalents and restricted cash and equivalents at the beginning of the period		45,704			52,128
Cash and cash equivalents and restricted cash and equivalents at the end of the period	$	52,926		$	38,191

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, continued

(Amounts in $000’s)

	Three Months Ended March 31,
	2023		2022
Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for interest	$	6,078	$	7,723
Supplemental schedule of noncash investing activities:

SEC Form 10-Q filed by Strawberry Fields REIT Inc.