Strawberry Fields REIT, Inc. ($STRW)

Good day, and welcome to the Strawberry Fields REIT First Quarter 2026 Earnings Call. [Operator Instructions] I'll now hand the call over to Jeff Bajtner, Chief Investment Officer. You may begin.

Thank you, and welcome to Strawberry Fields REIT's Q1 2026 Earnings Call. I'm the Chief Investment Officer. And joining me today on the call are Moishe Gubin, our Chairman and CEO; and Greg Flamion, our CFO. Earlier today, the company issued Q1 2026 earnings results, which are 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 business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financing and may not reference other matters affecting the company's business or the businesses of its tenants, including factors that are beyond it's control. Additionally, references will be made during the call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures as well as explanation and reconciliation of these measures to the comparable GAAP results included on the non-GAAP measure reconciliation page in our investor presentation. And now on to discussing Strawberry Fields REIT and our Q1 2026 performance [indiscernible]. I wanted to start by sharing some key highlights for the quarter. During the quarter, the company collected 100% of its contractual rents. The company signed a term sheet for a corporate credit facility with availability of up to $300 million. The facility will be comprised of a $100 million term loan and a $200 million revolving line of credit, both having initial 3 years and 2 1-year options. Proceeds from the facility will be used to refinance our existing secured bank debt and the remainder will be available to support acquisition growth. The rate on the facility will be SOFR [ plus 275 ]. The company expects to close on the facility during Q2 2026. Deal wise, while we did not close on any deals during the quarter, we were quite busy under on deals. As we have detailed in past presentations and investor calls, we have our disciplined acquisition model of 10 cap acquisitions that we have been true to over time and expect to stay on this course for the foreseeable future. I am pleased to report that subsequent to quarter end, the company entered into a contract for the acquisition of a hospital campus comprising of a licensed 60-bed hospital, licensed 99-bed nursing facility and ancillary medical office buildings in New York, Kansas City, Missouri. The purchase price will be $8.6 million, and the company expects to fund the acquisition from the balance sheet. The hospital campus will be at an existing master lease of a tenant in Missouri with initial base rents of $860,000 a year and subject to 3% annual rent [indiscernible]. Yesterday, the Board of Directors approved the Q2 2026 dividend, which will also -- which will be $0.17 a share and will be paid on June 30 to shareholders of record on June 16. Lastly, I'd like to point out that Strawberry Fields REIT remains the closest pure-play skilled nursing REIT in the market with 91.5% of our facilities being skilled nursing facilities. Additionally, we have not changed our investment approach of all our investments being triple net leases subject to annual rent increases. I would now like to have Greg Flamion, our Chief Financial Officer, discuss the quarter-end financials.

Thank you, Jeff, and welcome, everyone, to the Strawberry Fields First Quarter Earnings Call. Let's begin with a look at our balance sheet. Total assets are $878.6 million, an increase of $43.8 million or 5.2% compared to March 31, 2025. Our asset growth was driven primarily by recent real estate acquisitions, including $112 million of acquisitions completed in 2025. On the liabilities and equity side, increases were driven by financing activity associated with acquisitions, along with the impact of foreign currency translation adjustments. Together, these factors contributed to an overall growth in our debt balances. Equity declined, reflecting lower other comprehensive income driven again by foreign currency translation adjustments. [indiscernible] to the consolidated statement of income. 2026 revenue was $40 million, up $0.7 million compared to March 31, 2025. This represents a 7.1% increase, which was driven by the timing and integration of properties acquired in 2025. While we experienced higher revenues, the income growth was offset by higher depreciation and interest expense, which was driven by new property acquisitions. General and administrative expenses were also higher due to professional fees, corporate salaries and other operating expenses. These increases were offset by lower amortization expense. The result in the year-to-date net income of $9.4 million or $0.70 per share compared to $6.9 million or $0.13 a share in Q1 2025. Finally, I'd like to end my presentation with some financial highlights. Our 2026 projected AFFO is $75.4 million, representing an 11.4% compound annual growth rate. The 2026 projected AFFO per share growth is 10.7%. The 2026 projected adjusted EBITDA is $128.1 million, representing a 13.5% compounded annual growth rate. Our yield on leases is 14.2%. The company's net debt to net asset ratio currently sits at 49.0%. As of March 31, 2026, our dividend was $0.16 a share, representing a 5.4% yield, and an and AFFO payout of 47.3%. The company recently increased the dividend for Q2 to $0.17 a share. This concludes the financial portion of the earnings call presentation. I'll now turn it back over to Jeff Bajtner who will walk us through the additional portfolio highlights.

Thank you, Greg. As it relates to our portfolio highlights, our portfolio currently has 143 facilities located in 10 states. This is comprised of 131 skilled nursing facilities, 10 assisted living facilities and 2 long-term care acute hospitals. Also, these 143 facilities equate to 15,602 licensed beds. The total value of our portfolio at acquisition is $1.1 billion. Our portfolio currently has 17 consultants advising the operators. The average -- the weighted-average lease term is 11.1 years. I'm proud to report that our tenants continue to -- we continue to do well, and rent coverage is 2.1. The net debt to EBITDA of the portfolio at [ 0.6 ]. We continue to collect 100% of our rents. And as I mentioned earlier in my remarks, our pipeline remains strong, and it's in excess of $325 million. And with that, I'd like to pass it on to Moishe Gubin, our Chairman and CEO, to continue the presentation.

Okay. Thank you, Jeff, and thank you, Greg. As they both have alluded to, really -- we are on a nice trajectory in our business. This slide here reflects the last 5 years and projection of 2026 AFFO growth, which gives you a growth of -- accumulated growth rate of 11.4%. We're particularly proud of that. The [indiscernible] after that is base rent. And just similar time frame, similar trajectory, 13.4% growth rate. Our stock price over last year and -- we've seen highs and we're currently trading -- I mean we're trading too low, but we're up from how we ended the quarter and that was right when I think all that Iran stuff started. Comparatively, between us and our peers Strawberry is right in the middle. We're 26% on our stock. If you would have bought the stock a year ago until March 31, 26.4% return. And our trading multiples are still the laggard in the marketplace. I'm still dumbfounded on why that is. We're at 9.5x when the average is rent [indiscernible] or so and Care Trust is leading the pack at 21.4%. Our AFFO payout ratio continues to be the lowest from everybody else. And that's even I'm sure with the increase of our dividend that we announced today, our 70% payout ratio, and that's the lowest of our peers. We find that our best use of our money is within the REIT standards, the REIT rules and using the rest of the cash that we're generating to grow our portfolio. Our dividend yield, this is at March 31, at $0.16 is 4.9%. Obviously, with an increase, that should be somewhere in the 5s, maybe closer to 6s. As Jeff said earlier, we remain a pure play [indiscernible] real estate [indiscernible] REIT. And we're going to stay stick with that because that's really where our comfort zone is doing exactly what we're doing, staying very disciplined. We've continues for years and years and years, and we're going to continue to do exactly what we do in years where there are less deals. We'll just continue to stockpile cash, pay down debt and save our money for and we get the deals. I think this year, we'll still meet our target of between $100 million to $150 million, maybe exceeded. It's been a slow start, but we expect this quarter to really pick up and then actually have a bunch of closings in the third quarter. The next slide, just [indiscernible] shows our rent coverage from our tenants. That continues to grow. Again, every time we close on deals, we're starting every deal at a [indiscernible] coverage ratio. And so therefore, we're our own worst enemy where last year, we closed $112 million or so or something in 19 properties. So you take that, it weights us down, and as every quarter goes by, our tenants results improve. Our growth rate per share, beating everybody in the marketplace. And that's -- it's almost inverse to the payout ratio and we should continue to do that. I mean collectively, between the payout ratio, I mean the dividend yield and the AFFO per share growth, we're at the end of the day, better return than our peers averaging at about a 16% return a year. The next slide is probably the most important slide, and that basically shows you really how that -- how the math of what we do. So the projected '26 revenue of AFFO is over $75 million. Again, this is for 4 deals. This has not projected anything out. This is just what we have running today. So $75 million, the payout ratio for that is 47%. Retained cash flow close to $40 million. We then take that $40 million, and then we're able to buy -- we want to stay at or 49% leverage. So if we want to say at 49%, that basically gives us the ability to borrow about $50 million on that. So we can buy $90 million without changing our leverage at all. Reality is we have other cash sitting that we should be able to get more money out the door. And that's what we've done until now, and we expect that to continue. The next slide, is probably one of the biggest focuses we have right now. We should be announcing in the next little bit. We intend on refinancing a good portion of this money that's maturing this year, we expect to refinance half of it probably in the next couple of weeks, and then we'll do the other half probably sometime in August. Most of this -- where we end up in this situation is that once 2026 ends, we should have almost divided up equally over 4, 5 years, laddered debt insuring so that every year, we could be with a year's runway be able to sit there and refinance our debt. And that should be really good for having a business that can perpetuate [indiscernible]. It's interesting to note here, really, I made a mistake a few years ago, and all the maturity debts right around the same and it was intentional. The 1 thing that I missed is that there was a prepayment penalty all the way to the end. And to avoid paying prepayment penalties, we've gone down this road where now we have about 5 months left maturing on most of this debt. And so we're going to refinance most of it most of it soon and the rest of it in probably a few months. So that's the slide. The next slide really is shows how diversified our portfolio is. At this point, the really [indiscernible] large consultants or state is Indiana, which happens to be our best at, which is sitting at 25% of the portfolio 75% of the base rent. That being said, everything else is pretty even [indiscernible] in high single digits, middle double digits. And that's for an investor that's wanting to be diversified. Risk in our portfolio is not subject to -- we don't have much of single assets that where something goes wrong in 1 asset incurred us. Most of our stocks are in [indiscernible] leases, as most of you probably know. And if we had a problem in 1 specific state right? We'd be able to get through everything without there being anything really big as a risk. Next slide just really talks about where we're located. As you could tell, we've stayed mainly in the Midwest, and we got [indiscernible], we'll be announcing a deal for a new state in the Midwest in the next -- and hopefully, the next couple of weeks. It's good. Business is good. We're collecting all of our rents, like I think Jeff said earlier. And business, business is good. I don't -- we have no issues. On our last slide for today, -- and after this, we'll hand it off to the moderator to take questions from the audience. This really is 1 of my favorites because I just -- it's simple, simple, simple English. You look 3 months ended March 31 of '26 versus '25, and you see our net income went up to $2.5 million and FFO $2.7 million, and AFFO $2 million or so. And that's what it's all about really showing at the end there, they had about $75 million of annualized AFFO expected. The graph to the right, the financial to the right is EBITDA. Again, same story, just adding back depreciation, amortization and interest to come up with EBITDA number, we went up $2.3 million or so and adjusted EBITDA, a little bit less than $2 million. And I'm super super proud of all this. And with that, I will pass this back to the moderator to take on your questions.

[Operator Instructions] Our first question will come from the line of Richard Anderson with Cantor Fitzgerald.

So in mentioning the pipeline growing, I do see last quarter was [ 250 ]. Now it's [ 325 ]. I'm curious what the additions were not just the $75 million, but in form, like you did something in the second quarter with a hospital campus and some medical office. I'm curious if that will be more of the mix of stuff that you do going forward rather than just pure-play skilled nursing. And I'm just curious your mindset along that line.

So Rich, thank you for your question. Happy to hear your voice. Hope to see you at [ NAREIT ]. I would say that, no, we're going to stick with nursing homes. All of the -- not all, most of our deals that we're close to getting offers accepted on our skilled nursing facilities and a few of them are new states for us. And yes, the increase of the pipeline is deals that are just slow to get done. A lot of times people would get this interested and -- but we sit there and we just keep working it and we follow up with people to the testament of Jeff here on the call. just its persistency and staying with them and there's some deals and just lately, you seem like deals are taking slower. We had a deal that we signed up and actually CareTrust came in so from us. And that would have been a nice, nice deal for us, and they offer like $25 million more than us, which crazy because the other people have already except our offer. That being said, so we don't want to change what we're doing. This hospital, MOB deal comes with a nursing home. And we found value that the purchase price we're paying, the hospital and the MOB basically are throwing and the nursing home itself had more value than what we're paying. So we feel like we got a -- we're getting a great deal and our operator that's taking it from us say that has experience the doctor practice system practice. And we feel it's going to be a nice addition to our portfolio.

Okay. To add to Moishe point there that I mean the numbers -- it's almost a living and breathing number. It's constantly we evaluate the pipeline every week. And the only items that are really being included with this are just deals that we think there is an opportunity to complete. So -- as Mike said, I mean, this has been some deals I've been sitting here over time, but also, I mean, the SNF deal market has been picking up steam in the past, I'd say, in the past month. So we're looking at deals as Mike said, in new states, on existing states, and we're excited to see what we can do the rest of this year.

Okay. And then my second question, you mentioned CareTrust. How typical are you running into REIT peers in terms of competitive processes to get deals done. Is that sort of an anomaly? Or are you seeing some name brand folks that we all know and love out there with you, you're competing with?

Yes. Historically, we never ran up against them. But in the last like year or two, as we're trying to I mean we look at -- but as we're trying to do bigger deals just so that we figure the marketplace maybe would be more excited about our stock and who we are, if we can announce bigger deals and do bigger deals, all with the same metrics, exactly how we buy the same 10 cap, 10% cash-on-cash return day 1 for regular routine in rules of how we buy. And so when it gets to these bigger deals, which was our original thought, which was years ago, that's where the competitive bids are coming in. And we've lost 1 deal to [ Welltower ] and we lost 1 deal to CareTrust. And that was after we basically had a hand shake with the seller. And so you spend so much time on these things and then someone else comes in and says, okay, I'll just throw more money in it. So we're just going to keep doing what we're doing. I don't -- we're not changing our model to pay more. So -- and I'm not going to get this interested to stop looking at the bigger deals. I think there's a benefit, and I love CareTrust and I love Dave [ Zedrick], and I said that probably 1,000 times. But I just think that we're just -- we offer something on a personal level with a lot of the sellers. And so we should be able to pull down these deals. And I would say that it hopefully will be an anomaly that we lost a few deals to the bigger boys.

Our next question coming from the line of Gaurav Mehta with Alliance Global Partners.

I wanted to ask you on the acquisition pipeline, I think on the last earnings call, you had mentioned the target of $100 to $150 million of acquisitions this year, given that you had a slow start in [indiscernible], are you still hoping to hit that target?

Yes, yes. I'm hopeful that the third quarter will close somewhere in the $90 million to close to $100 million range. And I'm hoping that in the fourth quarter, we'll have another 15 to like 30 or 40 unless something else pops up. So right now, we're looking at -- everything is going to get into third quarter and fourth quarter, and we should hit easily the $100 million. And hopefully, we should do $100 million and break $150 million.

And so for the third quarter, $90 million to $100 million, are you guys looking at like a portfolio?

Yes. We're looking at -- we have 1 deal -- we have a deal that we didn't announce yet that should be in the 80s for group of homes and a new state. And then we have this deal in Missouri that we've announced. We have another deal that. We also did announce that, that's going to also add to a master lease in a state we're already in that will be at a $15 million deal. And so between those 3 deals alone, you're looking at $107 million, $108 million. And we have some other things. We've got a portfolio elsewhere with a new-ish but as someone who is a tenant of ours or will be a tentative or ours real soon, another package that they were looking at with them. And so if that deal hits, that will get us like about $145 million over $150 million or so. So the good news is we will have our line of credit up and running by the end of this month. We're going to have a new bond issue next week or the next 2 weeks in Israel to basically kick the can down the road. And our debt and we'll have availability between the line of credit and without doing an ATM, without doing a fundraise, without taking on any other additional debt, we have the ability based on our just available borrowings and size of cash in our books, we'll have about $150 million or so of availability right around. So we have the cash to be able to do all the stuff and keep ourselves in the same leverage band that we're in right now. Right now at 49%, which is right -- basically in the middle of where we want to be. And I think we're in a good spot. I just -- I would have liked -- I got to like kind of plan it out better for future years that we have stuff that we pushed into first quarter. So when we come to the first quarter call, I can say, "Hey, we closed at least this debt or the other thing sounds a little better than -- well, we had a great quarter. We made a lot of money. We're doing great and collecting 100%, which also sounds good, by the way. It just doesn't sound -- I think it would sounder if I would add a deal closing in the first quarter that I could be able to walk around like a Peacock about, but it is what it is.

All right. As a follow-up, I wanted to ask you in the earnings release, you talked about investing some time in different processes within the company this quarter. Can you maybe provide some color on what those processes were?

Yes. What we were trying to refer to is, I think we're referring to the refinancing and cleaning up our debt. A lot of effort goes into -- a big portion of our debt is sitting in Israeli bonds, which I'm proud of. I like the relationship we have with the Israeli market. And so our time and effort has been has been on creating a couple of new series that we'll have in Israel to clean up. The 3 that we're having that mature this year. The other thing has been the -- creating the line of credit with the bank, which is something that all the other -- our peers will have. And we thought maybe that, that was 1 of the issues that maybe investors maybe think about, is that when they look at our company, they go, "Well, we don't have the dry powder to be able to close on certain deals and we wanted to be able to have the lines of credit, so we could be able to tell potential investors. No, we have plenty of dry powder. I mean everyone who knows me and knows our business knows that there hasn't been a deal that we made that we couldn't close. But maybe an investor that doesn't know that. It doesn't -- hadn't had a chance to speak to me or one of my guys that they might not have known that. And therefore, we want to be able to have that so that when we put that into the queue and future press releases, we're able to say, yes, we just have this line of credit that we could draw on and then we went to the public, sold stock to pay down debt and keep ourselves between 45% and 55% on the leverage side. So that's based on what we've been working on outside of -- I'm always looking at deals. But it was just cleaning up our debt stack and the funnels of our balance sheet so that going forward, we'll have a normal laddered, laddered debt maturity and we'll have a line of credit that's just there for us to be able to use when we need to buy something.

Our next question coming from the line of John [ Massocca ] with B. Riley Securities.

Maybe going back to term loan. Post closing, what's the appetite for taking on the term loan side, swapping out any of that fixed rate versus leaving draws on that floating?

That's an interesting question. I like it. Well done, John. You didn't stump me. I just haven't thought about it. I think when you're in an interest rate environment that most people expect to be either at this point, I mean the way the economy is running, it seems like it's going to remain stable. Interest rates are definitely not going up. Usually, when you have that, you usually don't want to lock in fixed from my perspective. I haven't given thought or maybe something I'm going to think about. But I think that at this point in a declining rate environment, I think it's probably not wise for me to do fixed. But it's something thing about it, and I appreciate the question. In years past, we relied on HUD being the exit for our debt and then that's long-term 40-year money. But in the last few years, since Corona, the way HUD's been as far as lending and our relationship specifically with HUD has been -- I don't know the right word, I don't want to put an adjective on it that makes anyone nervous, but it's just like it's just been -- we're not going anywhere at stage that relationship. So historically didn't have to think about where to place the long-term debt and tend to lock things in for a fixed rate. But yes, but that's a great question because that's something now that has to be in the forefront for us to think about. I think we're kind of hedged because of the declining rate environment, which is -- that's my prognosis. I could be completely wrong. I mean, of course, I can be completely right. But that's my thought. And my background is a little bit banking as well. So in the banking world, we're thinking that it's the same thing, stable to declining rate environment. I think I answered your question, John. I don't know.

That was helpful color. And maybe with the -- it sounds like still in the market with potentially new Israeli bonds or at least refinancing of the existing Israeli bonds. What's pricing look like on that today as you kind of work through those? And I guess how would you think about maturity dates or term on that debt? Because it sounds like you're going to probably break out the refinancing into a couple of different tranches. Just kind of curious how that's shaping out as you start the process or work through the process, I should say, today?

Yes. No, we're towards the end of the process, and it's a great question, [indiscernible]. It's about 4.5-year money, and the price today is about $685 million or so, and they got to add in a little bit in the fees, but I don't think anyone ever mentions that on any of these calls. So I'm not sure if I'm solstarbythat on that, but the actual interest rate is going to be 6.85% in 5-year money expiring the end of 30. And then when we do the second tranche in August, September, that will be expiring sometime in maybe June 30 to 31. And the idea for all of this is the corrective measure from my mistake that I made a few years ago is all of it's going to have a prepayment holiday for like the last 6 months for me to be able to refinance it instead of going closer to the wire to be able to refinance it earlier in the mix. And just on that topic, the line of credit and term loan that we created for -- with the conventional bank, those are going to have two 1-year extensions at the end of them so that we -- so that during those two 1-year extensions, so during the first 1 year extension, that will be the time that we work on the extension or the new debt to replace that. And that also -- that ends in 5 years. So -- so kind of the way we're positioning it is we're kicking the can of '26 money and part of '28 money, and we're ending up with half in '30 and half in '31 basically and then comes to 20 -- the stuff that's going to mature in '27, we could start working on now to kind of push to '32. And then we'll just start on enrolling rolling maturity latter of 1 year at a time that we could just kick the can 5 years down on each thing. And then -- and as we grow and what we do, then that tranche will just have the additional of the new stuff together with that and kind of push it down 5 years. I hope that makes sense. But that's -- I think my idea my idea, and I'm not planning on going anywhere, god-willing [indiscernible] being alive and healthy and that the shareholders want me to keep leading the keep doing this is that is that -- I want to create all these processes that the business is able to be perpetuated long term so that the normal maturities every year becomes the process. We have to -- this year's batch of debt that's maturing, push it down 5 years and have that rolling every year as a normal routine. Same thing with all the all the processes that we have in place with how we buy and even IR, how we deal with the public. And all of these things, I want the process to be so clear and clean that we should be able to perpetuate it on a regular routine. Not to be robotic, but to be able to be reliable and credible. I think that answers.

And then maybe switching gears a little bit, -- and then maybe switching gears a little bit. In terms of the potential action in a new state, is that with the existing consultant relationship or a new one? And I guess what's the appetite for some of the existing consultant relationships to try to grow here in the current market?

So starting point of that question is that our relationships with our tenants are amazing. We don't have any negative communication or relationships. They're all fantastic. I mean all of us, I consider everybody part of the family, and it's really, really -- it's really good. The -- so from our current roster of tenants to the folks in Oklahoma, we're growing with them. These deals we've consistently been buying more deals in Oklahoma, Texas, we're growing with current operators. Missouri, we're growing with current operators. Ohio, over the years, we haven't grown. And believe me, I love those tenants. We just renewed -- they've been tenants already now more than 10 years. It just -- relationship hasn't grown, unfortunately, and we're very, very close -- I'll call close friends. And -- but the newer things for the newer packages are all brand new operators that are not new to me as human beings. Some of them are borrowers at my bank. Some of them are just people that have been industry that out for many years. And so -- and so we have 2 new relationships in 2 different states that we're starting with now, God willing, that we're going to start with a decent size between 5 and 10 homes at each portfolio. And god-willing, it should be great. And again, if any deals that come along, we have a commitment between our tenant and us that we're looking -- so out of the 10 states we're in, there's probably 5 or 6 of them that we want to grow in, and we don't want to grow with the related party stuff that's been diminishing and that's down to 46% of the portfolio, and we should be announcing something soon. That's going to then further dilute that down. But yes, we -- I guess that's something that we don't really -- we should bring up in our presentations. I mean our relationships with our tenants are fantastic. And yes, we would grow with almost all of them. if we could.

And I would add to that 90% of our facilities are in master leases right now. And it's been -- I mean the best way to grow is just once you have the -- once the table set with that master lease, it's just very easy to keep on adding facilities. As we've been doing that, as Moishe said in Oklahoma, Missouri, the past year, it's been very good, both us and the tenant.

Our next question coming from the line of Mark Smith with Lake Street Capital Partners.

I just wanted to go back a little bit about what you're seeing here for deals. It sounds like a lot of work in Q1, but some that just didn't get across the finish line. Outside of competition for some of these deals, is there anything else that's kind of changed or that's made it harder to close on some of these?

No, no, absolutely not. We don't have any issues with cash. We don't have any issues regulatory-wise. I know there's some stories out there a little bit, centered to [indiscernible] and a couple of others are around this issue about health care REITs owning nursing homes, but that really has been a lot of talk. I actually called both senators offices to say, hey, let me talk to you and explain it to you when they didn't really have time or want to talk to me. That being said, there's no real -- there's nothing blocking us from doing any deals other than the competitive of the price. And if a deal doesn't underwrite, we remain very disciplined. And we're not looking to risk our portfolio on just what they call that a wish, whatever it is a part and whatever it is, wish, -- we're not looking to do any of that. We're looking to stuff that makes sense, that the math is there. continue with our process and do things the way we do it. And it's worked, and it should continue to work. It's just it was just a slow first quarter for us, unfortunately as far as portfolio growth.

Okay. And then I just wanted to ask about just geographical expansion. I know we're talking about the Southeast and some other markets, it does sound like we'll see -- likely see a new state added here soon, but it sounds like that's still in the Midwest. Just kind of curious your appetite around more geographic expansion.

Yes. We got close on a couple of deals. Georgia and if we found deals, which we haven't even seen any deals, Alabama, Mississippi, it would be great to get down to or South Carolina. But yes, where the deals and where we're growing are both going to be Midwest deals and the increases to our portfolio are most likely going to be Texas, Oklahoma, maybe a little bit Tennessee. And always, if we could find anything in Indiana, we particularly not wanted to grow in Illinois for many years, because when we started, we were just top heavy there. And we want to make sure that we have a diversified portfolio. So that's kind of our own internal control as far as growing there. But yes, no, I would love to grow in the next few years, certainly, Iowa. If we can get a deal in Michigan, we looked at a deal in Michigan at 1 point. Wisconsin, stick with that and to see where it goes.

Our next question comes from the line of Ken Billingsley with Compass Point Research and Trading.

I just want to follow up on this kind of the comments you were just making. On the -- so on the competition, you have a big deal that you announced likely is coming. Of the ones that you lost, what was -- what kind of made them go with the competitors? Anything in specific, anything that you're able to maybe manage in the future with some of these larger deals you're looking at?

Yes. It's actually an interesting thing. That deal will make that difference and why we lost that deal was that was a broker deal different than a lot of our deals. A lot of deals we know the sellers, and they specifically want to work with us and they chase us down and we work with them and deals get made. The brokers rightfully are looking for top dollar, and they get more of a commission if it's a bigger deal. And that deal that we lost was a deal that we spent time working with the broker and the brokers we're very friendly with. These are good people. But at the end of the day, until the ink is dry on those deals, when it's a broker-based deal, right? Someone to come in with a bigger dollar amount and the broker calls to a client and say, "Hey, you could probably still get out of your deal if you want to go take a different deal. And in that case, we didn't know the seller at all. And the seller took the last minute, this is 1:59 and 58 seconds and a much higher offer, and they took it. And that's -- the only thing we could do differently there is somehow earlier in the process, get to know the sellers. But in our world, the sellers that we buy from are sellers that we've known for 20 years or 10 years, we're known in the industry. We go to all the events. We spend a lot of time talking to people. So -- and so I don't know if we could have done anything different there other than give a little bit trip to the broker saying, you got to be a little nice or not pull it delay from us at the list in the last minute. But I don't think we could have done anything differently there.

Do you have a sense of what the cap rate went out on that deal?

Yes. That's actually the -- I guess, not the saving grace or whatever is that. In theory, our portfolio is way undervalued because if everything would trade at the 8.5% cap that someone else is willing to buy these things at. If you reprice my whole portfolio at 8.5% cap, you'd say that I have another couple of hundred million dollars of equity. So yes, no, I think it traded at an 8.5% cap.

Okay. Last question I have is on the $255 million that's maturing through the remainder of this year, how much of this is going to be refinanced with the Israeli bond tranches that you mentioned versus the $300 million in financing.

If I commit to 1 thing, the pricing is going to go up. So I don't really want to answer that. But I would say that from my point of view, my primary desire would be would be 2 Israeli bonds to replace the 3 Israeli bonds. So I would do -- the bond we're doing next week, got willing. And then assuming I mean the last 2 bonds we did, we were oversubscribed by like 50%. So assuming we have the same oversubscription and people want it. We would probably take -- we would probably take the most we can take and then pay down early, one of the other bond debt. So what that does for us is that it locks in our currency for 4 or 5 years, which is a hedge. If we -- today, the dollar versus the shekel, the shekel is strong. So we have built in tariff financial statements. It's a sizable allowance for currency. And I don't want to realize that. So if we kick the can down the road 4 or 5 years on the currency, then I don't have to realize a loss that we've already expensed. It's OCI, so no 1 looks at it, but it's -- but nevertheless, it's there. So my desire is most likely to go to the Israeli market, assuming they want to -- that they're going to stay competitive on the pricing, which they should.

Okay. the follow-up on that was please. It looked like you have 50 basis points of spread improvement depending on how you structure this. Would that be fair to assume?

Yes. Yes. Yes. We're going to go from an average rate between the 9.1%, the 6.9% and the 5.7%, which are the 3 tranches that have to get refinanced. It will end up all being at 6% in 3 quarter. 6.85%, if we do the commercial loan, we end up being like 6.4%, something like that, 6.4%, 6.5%. And either way, you're talking about an improvement of at least 0.5 point on a couple of hundred million dollars of debt.

And then leaving you with the $150 million of dry -- when all said and done, $150 million of dry powder to work.

Yes. $150 million to $140 million. Yes. 100%. I think -- it's a good spot to be in at the end of the day.

I'm not showing any further questions in the Q&A at this time. I will now turn the call back over to Jeff for any closing comments.

No. Thank you so much. Thank you, everyone, for joining us. It's always a pleasure hearing everybody's questions. If you have any further questions, please feel free to reach out to Mac, myself or Greg I'd also like to further add. If anyone is interested in listening to our -- the recording from yesterday's Annual Shareholder Meeting. It's up on our website strawberryfieldsreit.com. And once again, thank you, and have a wonderful weekend.

This concludes today's conference call. Thank you for participation. You may now disconnect.