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Leases

12 Months Ended

Dec. 31, 2023

NOTE 6. Leases

As of December 31, 2023, the Company had leased 98 properties to tenant/operators in the States of Illinois, Indiana, Michigan, Ohio, Texas, Kentucky, Tennessee, Oklahoma and Arkansas. As of December 31, 2022 the company leased 79 properties. In both December 31, 2023 and 2022 all of the Company’s healthcare facilities were leased. Most of these facilities are leased on a triple-net basis, meaning that the lessee (i.e., operator of the facility) is obligated under the lease for all expenses of the property in respect to insurance, taxes and property maintenance, as well as the lease payments.

The following table provides additional information regarding the properties owned/leased for the periods indicated:


	December 31,
	2023		2022
Cumulative number of properties		98		79
Cumulative number of operational beds		12,201		10,332

The following table provides additional information regarding the properties/facilities leased by the Company as of December 31, 2023:

State	Number of Operational Beds/Units		Owned by Company		Leased by Company		Total
Illinois		4,226		20		-		20
Indiana		3,240		33		1		34
Michigan		100		1		-		1
Ohio		238		4		-		4
Tennessee		1,056		12		-		12
Kentucky		1,163		10		-		10
Arkansas		1,568		13		-		13
Oklahoma		137		1		-		1
Texas		473		3		-		3
Total properties		12,201		97		1		98

Facility Type
Skilled Nursing Facilities		11,865		96		1		97
Long-Term Acute Care Hospitals⁽¹⁾		63		2		-		2
Assisted Living Facility		273		8		-		8
Total facilities		12,201		106		1		107

(1)	Each property is comprised of a skilled nursing facility and long-term acute care hospital.

As of December 31, 2023, total future minimum rental revenues for the Company’s tenants are as follows:

Year	Amount
(Amounts in $000’s)
2024	$	93,923
2025		86,439
2026		69,687
2027		70,250
2028		66,360
Thereafter		148,589
Total	$	535,248

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6. Leases (cont.)

The following table provides summary information regarding the number of operational beds associated with a property leased by the Company and subleased to third-party operators:


	December 31,
	2023		2022
Number of facilities leased and subleased to third-parties		1		1
Number of operational beds		68		68

Right of use assets and operating lease liabilities are disclosed as separate line items in the consolidated balance sheets and are valued based on the present value of the future minimum lease payments at lease commencement. As the Company’s leases do not provide an implicit rate, the Company used its incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease expense is recognized on a straight-line basis over the lease term. The Company’s operating lease obligation is for one skilled nursing facility. The lease expires on March 1, 2028 and has two five-year renewal options. The lease is a triple net lease, which requires the Company to pay real and personal property taxes, insurance expenses and all capital improvements. The Company subleases the building as part of the Indiana master lease. Based on the sublease with the Company’s tenant, the tenant is required to pay real and personal property taxes, insurance expenses and all capital improvements.

The components of lease expense and other lease information are as follows (dollars in thousands):


	Years ended December 31,
	2023		2022
Operating lease cost	$	405	$	392


	As of December 31,
	2023			2022
Operating lease right of use asset	$	1,542		$	1,833
Operating lease liability	$	1,542		$	1,833
Weighted average remaining lease term-operating leases (in years)		4.25			5.25
Weighted average discount rate		4.1	%		4.1	%

Future minimum operating lease payments under non-cancellable leases as of December 31, 2023, reconciled to the Company’s operating lease liability presented on the consolidated balance sheets:

	(Amounts in $000s)
2024	$	397
2025		397
2026		397
2027		397
2028		99
Total	$	1,687
Less Interest		(145	)
Total operating lease liability	$	1,542

Other Properties leased by the Company

The Company, through one of its subsidiaries, leases its office spaces from a related party. Rental expense under the leases for the year ended December 31, 2023 and 2022, was $209,000 and $203,500, respectively.

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS