Strawberry Inc. in 2025: Rent Growth Was Real, but 2026 Is Still a Refinancing Year

Introduction to the Company

Strawberry is not a generic real-estate landlord. It is a U.S. healthcare real-estate platform with 132 owned properties and one additional leased property, 143 healthcare facilities, and 15,602 licensed beds across 10 states. The model looks simple on the surface: long-duration, mostly triple-net leases to operators of skilled nursing facilities, assisted living facilities and long-term acute care hospitals. In practice, the thesis lives or dies on operator quality, rent coverage, funding flexibility, and how much of the value created at the consolidated level actually reaches common shareholders.

What is working now is real. In 2025 rental revenue rose to $155.0 million from $117.1 million in 2024. Adjusted FFO rose to $72.5 million, adjusted EBITDA rose to $125.3 million, and annualized base rent reached $142.7 million after another year of acquisitions and lease restructuring. This is not a story of a stagnant portfolio.

What a superficial read may miss is that 2026 is still shaped more by liability management than by pure operating momentum. According to the annual debt schedule, $258.9 million of principal comes due in 2026. The company is advancing refinancing solutions, but those solutions were not closed as of the evidence set used here. At the same time, 48.5% of annualized base rent is still tied to related-party operators, and the public company owns only about 24% of the operating partnership units. So the consolidated numbers are materially thicker than the slice that belongs to common shareholders.

That is the active bottleneck: not whether the real estate can generate rent, but whether Strawberry can keep the acquisition machine and the rent story moving without the market collapsing the whole read into refinancing risk, related-party risk and thin common-equity capture. There is also a practical actionability constraint in the local market. Trading in the TASE line is very thin, with last reported daily turnover of only about NIS 24 thousand. That does not change the underlying business, but it does change how friction gets priced.

Events and Triggers

First trigger: the Kentucky re-tenanting move. At the start of 2025 the company entered a new master lease for 10 Kentucky properties that had previously sat inside the Landmark master lease. Base rent under the new lease is $23.3 million per year, with CPI-linked increases and a 2.5% minimum step-up. That helped the revenue line, but not for free. As part of the same move, the company took on a $50.9 million note payable bearing 10% interest and created a lease-right asset of almost the same size. This is a good example of a transaction that improves one layer of the model while burdening another.

Second trigger: 2025 was a full acquisition year. In January the company added six facilities in Kansas for $24.0 million. In March it acquired another facility in Oklahoma for $5.0 million. In April it bought a facility in Texas for $11.5 million. In July it acquired nine facilities in Missouri for $59.0 million. Additional acquisitions followed in Oklahoma and Missouri. The message is clear: Strawberry still sees itself as an expanding platform, not as a landlord pausing to delever quietly.

Third trigger: the 2026 refinancing map is already open. On March 7, 2026 the company announced that it had signed a term sheet with a large institutional bank for a new credit facility of up to $300 million, including a $100 million secured term loan and a $100 million revolving facility expandable to $200 million. Pricing was disclosed at SOFR plus 2.75% with a 5.50% floor, subject to a 65% maximum loan-to-value and customary covenants. This is a meaningful step, but it was still a proposed facility rather than a closed one.

Fourth trigger: the company also opened a new parent-level bond path. On March 9, 2026 a new bond series received an ilA+ rating for up to NIS 200 million principal amount, with proceeds intended mainly for refinancing existing financial debt. On March 11 the company further stated that it was examining using the proceeds to repay Series A partially or in full. Again, that is directionally helpful, but not the same as completed funding.

Fifth trigger: the legal backdrop improved. On March 10, 2026 the Arkansas court dismissed with prejudice the amended complaint against the company, directors and related entities, finding that the plaintiffs had failed to cure the deficiencies previously identified. As of the filing date, no appeal had been filed. This is not a growth engine, but it does remove a lingering background overhang.

Efficiency, Profitability and Competition

The central point is that 2025 improvement was real, but it did not come only from quiet same-portfolio growth. It came from a mix of acquisitions, re-tenanting, and contractual and financing engineering.

Rental revenue rose 32.4%. Within that increase, the company explicitly attributes at least $13.1 million to the re-tenanting of the Landmark and Kentucky master lease, about $10.3 million to the Missouri lease, $5.5 million to Tide Group expansion, and $2.4 million to the new Kansas master lease. That is not just passive portfolio growth. It is deliberate portfolio restructuring.

The less clean side is cash conversion quality. FFO came in at $79.6 million, but adjusted FFO moved down to $72.5 million after a $7.1 million straight-line rent adjustment. In plain terms, part of the rent improvement was still recognized before it fully turned into cash. That is not unusual in long-duration lease accounting, but it matters in a year when the company is also leaning heavily on adjusted metrics.

Operating profitability itself held up well. Rental revenue grew materially faster than operating expense, and operating income rose to $84.3 million from $61.3 million in 2024. But from there the financing burden eats a large share of the improvement. Interest expense, together with related financing costs and HUD insurance premiums, rose to $51.0 million from $34.8 million in 2024. So 2025 is a year in which the real-estate layer looks stronger, but each extra dollar of operating progress also has to be read against a more demanding liability structure.

What really drove earnings

Net income rose to $33.3 million, and net income attributable to common shareholders rose to $7.6 million. The gap between those two numbers is not a footnote. $25.7 million of profit was allocated to non-controlling interests. That is why metrics such as adjusted EBITDA or FFO describe the property layer well, but not necessarily the common-shareholder layer.

Competition, but not in the usual sense

Strawberry is not mainly competing for office tenants or retail demand. It competes for access to healthcare real-estate transactions, for operator relationships, and for the ability to write lease structures that still hold when operators are working in reimbursement-heavy and regulation-heavy states. Here the company does have a clear edge, deep sector experience and an operating network that comes from management’s background in skilled nursing. But the same advantage also creates the risk. Very close ties to related operators can be both a real information edge and a dependency layer that is harder to ignore than management’s presentation suggests.

Cash Flow, Debt and Capital Structure

This is where the story sits. If you read Strawberry through a narrow normalized cash-generation lens, you get a reasonably strong underlying business. If you read it through an all-in cash flexibility lens, meaning how much cash is left after the actual cash uses of the year, the picture becomes materially tighter.

The all-in framing is the right one here because the core question for 2026 is funding flexibility, not only recurring operating cash generation. In a triple-net model the company does not disclose a clean maintenance-capex line at its own level, because most recurring property capex sits with tenants. That makes a narrow maintenance-cash bridge less useful for the current thesis.

In 2025 cash flow from operations was $90.0 million. That is a good number relative to net income, and it benefits from heavy depreciation and amortization. But in the same year the company spent $110.0 million on real-estate acquisitions, increased notes receivable by $1.8 million, repaid $15.0 million of bonds, repaid $43.3 million of senior debt, repaid $8.3 million on the note payable, paid $7.6 million of dividends, and distributed $25.6 million to non-controlling interests. Even after $95.2 million of net bond proceeds and $2.3 million of ATM equity issuance, total cash and restricted cash fell by $26.9 million.

That leads to a simple conclusion: the business can generate cash, but 2025 was not a year in which operations funded the full growth program, debt service and distributions.

Debt structure

At year-end 2025 total debt stood at $794.7 million. The stack was made up of $254.1 million of HUD debt, $163.2 million of bank loans, $334.8 million of Series A through D bonds, and a $42.6 million note payable. Based on the March 2026 presentation, net debt was $716.1 million and net debt to adjusted EBITDA stood at 5.72x.

The good news is that the company reports compliance with all financial covenants on its bank facilities. The less comfortable news is that 2026 is still a very heavy maturity year. Three material balloon-style obligations, $94.7 million in the parent-company Series A, $77.7 million in the subsidiary-level Series C, and $55.1 million in the subsidiary-level Series D, all sit in 2026 before the rest of the debt service picture is even considered.

The Kentucky move shows how the model works

The Kentucky transaction is a useful micro-example. On one side, the new master lease increased rent and reduced uncertainty around an important cluster of assets. On the other side, it created a $50.9 million note payable at 10% and lease-right assets that pushed total intangible assets up to $68.4 million. That is a transaction that helps revenue quality at one layer while tightening funding flexibility and raising amortization at another.

The public-shareholder layer

One bridge has to be made explicitly. Strawberry operates through an UPREIT structure, and at December 31, 2025 the public company owned only about 24% of the operating partnership units. That means 76% of the operating partnership sits outside the common-shareholder layer. On the consolidated balance sheet total equity was $50.5 million, but only $12.1 million was attributable to the company’s stockholders. The same logic shows up in the income statement, $33.3 million of consolidated net income versus only $7.6 million attributable to common shareholders.

That does not make adjusted EBITDA or FFO irrelevant. It does mean that any investor using those metrics has to ask what really remains after non-controlling interests, debt service and common-level cash obligations.

Outlook and Forward View

Before looking at 2026, five non-obvious points matter:

• The rent jump in 2025 did not come only from quiet organic growth. A large part came from acquisitions and re-tenanting.
• The Kentucky fix improved rent, but it also created a $50.9 million note payable and almost the same amount of lease-right assets.
• Adjusted FFO looks strong, but $7.1 million of straight-line rent still had to be stripped out, so not all the rent improvement has already shown up in cash.
• The 2026 refinancing map is still not closed. The pipeline now includes both a proposed bank facility and a proposed new bond series, not only existing cash.
• Nearly half of annualized base rent is still linked to related-party tenants, while operator payor mix is 78% Medicaid.

The right label for 2026 is a financing bridge year. Not a reset year, because the core business is not broken. Not a clean breakout year either, because refinancing still comes before any cleaner read on growth. This is a year in which the market is likely to demand funding proof first and give full credit to adjusted earnings only after that.

What has to happen next

First, the bank facility and the new bond plan need to move from plausible options to signed outcomes. Until then, the 2026 maturity wall remains the main risk center.

Second, the company needs to show that portfolio growth is not only inflating contractual rent but also holding operator coverage quality. The 2.07x rent-coverage figure looks healthy, but it is unaudited and based on annualized operator results as of November 30, 2025. It is useful, but not the same thing as a full 2026 operating proof point.

Third, the market will want to see whether the share of unrelated tenants is actually rising economically, not just remaining a stated objective. The company itself says reducing dependence on related-party tenants is one of its goals. By year-end 2025 it was still far from done.

Fourth, balance-sheet flexibility has to survive the refinancing. Debt that is refinanced with new debt does solve one problem, but if the replacement comes with more encumbered assets or higher SOFR sensitivity, it can worsen another layer of the thesis.

Risks

Refinancing risk: this is the first and clearest risk. 2026 principal maturities are heavy, and the solution is not fully closed. The company has made visible progress with a bank term sheet, a new bond rating and a stated possible use of proceeds against Series A, but all of that still depends on approvals, diligence and execution.

Related-party operator risk: 66 out of 143 tenants are related parties, and 48.5% of annualized base rent still comes from related-party operators. More than that, at year-end 2025 the company had $16.3 million of straight-line rent receivable from related parties, $8.8 million of tenant replacement-reserve balances tied to related parties, and $5.8 million of notes receivable from related parties. That does not prove a problem, but it does show that the relationship goes well beyond lease contracts alone.

Regulatory risk through payor mix: based on the presentation, operator payor mix is 78% Medicaid and only 5% Medicare. In plain English, Strawberry may own relatively stable real estate, but its tenants still rely heavily on public reimbursement systems. That brings healthcare regulation and state budget decisions directly into the business-quality read.

Rate and currency risk: $160.5 million of debt was floating-rate at year-end 2025. The company estimates that a 100-basis-point rise in one-month SOFR would reduce annual cash flow by roughly $1.6 million. In addition, 2025 included a foreign-currency translation loss that reduced accumulated other comprehensive income by $34.8 million.

Actionability risk in the market: short interest in the equity is negligible, but that is not a strong positive signal by itself. Short float stood at 0.00% in the latest market snapshot, and local liquidity is extremely weak. A stock trading only tens of thousands of shekels a day does not generate a deep short-interest signal.

Conclusions

Strawberry finished 2025 with real operating improvement. Rent went up, adjusted FFO improved, and the company kept expanding the portfolio. But this filing does not describe a platform that has already reached the clean side of the story. It describes a company entering 2026 with better assets and stronger rent, but still with a very open financing test.

Current thesis: the economics of the portfolio improved, but 2026 will be decided mainly by refinancing execution and by whether management can prove that growth is becoming less dependent on related-party concentration and less diluted by the thin common-shareholder layer.

What changed versus the earlier read is that the key concern no longer sits only around tenant quality or acquisition pace. It now sits in the combination of stronger revenue, a crowded debt map, and a clearer understanding that not every dollar of consolidated value flows through equally to common shareholders.

The strongest counter-thesis is that the market may be over-focusing on the financing friction. The company still shows 2.07x rent coverage, active access to debt markets, an ilA+ rating even for the new refinancing path, and a real-estate portfolio in a segment with high entry barriers and constrained supply. If refinancing closes on workable terms, the whole setup may look materially cleaner within one or two quarters.

What can change the market read over the short to medium term? Mainly three things: the actual closing terms of the proposed bank facility, whether the new bond path is completed and how much of Series A it repays, and evidence that unrelated tenant exposure is growing economically rather than only in management language.

Why does this matter? Because in Strawberry’s case the difference between a good healthcare real-estate portfolio and a clean equity story runs through funding, operator quality, and how much of the value created above the OP layer really remains with common shareholders.

Over the next 2 to 4 quarters the company needs to prove four things: close the refinancing moves, keep operator rent coverage healthy, reduce related-party weight over time, and show that the improvement in adjusted earnings reaches common shareholders more cleanly than the 2025 filing currently suggests. If that happens, the read on Strawberry can improve quickly. If not, even a good AFFO print will not be enough to clear the friction.