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Leases

6 Months Ended

Jun. 30, 2025

NOTE 6. Leases

As of June 30, 2025, and December 31, 2024, the Company had leased 122 properties and 114 properties, respectively, to tenant/operators in the States of Arkansas, Illinois, Indiana, Kansas, Kentucky, Michigan, Missouri, Ohio, Oklahoma, Tennessee and Texas. As of June, 30, 2025 and December 31, 2024, all the Company’s 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 by the Company for the periods indicated:

	June 30,		December 31,
	2025		2024
Cumulative number of properties		122		114
Cumulative number of operational beds		14,752		14,186

The following table provides additional information regarding the facilities leased by the Company as of June 30, 2025:

State	Number of Operational Beds/Units		Owned by Company		Leased by Company		Total Number of Facilities
State	Number of Operational Beds/Units		Owned by Company		Leased by Company		Total
Illinois		4,226		20		-		20
Indiana		3,404		35		1		36
Michigan		100		1		-		1
Ohio		238		4		-		4
Tennessee		1,412		15		-		15
Kentucky		1,163		10		-		10
Arkansas		1,568		13		-		13
Oklahoma		337		3		-		3
Texas		839		6		-		6
Missouri		1,111		8		-		8
Kansas		354		6		-		6
Total Properties		14,752		121		1		122
Facility Type
Skilled Nursing Facilities		14,345		119		1		120
Long-Term Acute Care Hospitals		63		2		-		2
Assisted Living Facility		344		10		-		10
Total facilities		14,752		131		1		132

As of June 30, 2025, total future minimum rental revenues for the Company’s tenants are as follows:

Year	Amount
(Amounts in $000s)
2025 (six month period)	$	63,344
2026		118,687
2027		120,806
2028		118,514
2029		112,179
Thereafter		456,709
Total	$	990,239

STRAWBERRY FIELDS REIT, INC. and Subsidiaries

NOTES TO CONDENSED 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 a third-party operator:

	June 30,		December 31,
	2025		2024
Number of facilities leased and subleased to third parties		1		1
Number of operational beds		68		68

Right of use asset and operating lease liability are disclosed as separate line items in the condensed consolidated balance sheets and are valued based on the present value of the future minimum lease payments at the 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 in Indiana. The Indiana lease has an initial term that 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):

	2025		2024		2025		2024
	Six Month Period ended June 30,				Three Month Period ended June 30,
	2025		2024		2025		2024
Operating lease cost	$	198		384		99		132

	June 30, 2025			December 31, 2024
Operating lease right of use asset	$	1,029		$	1,204
Operating lease liability	$	1,029		$	1,204
Weighted average remaining lease term-operating leases (in years)		2.75			3.25
Weighted average discount rate		4.1	%		4.1	%

Future minimum operating lease payments under non-cancellable leases as of June 30, 2025, reconciled to the Company’s operating lease liability presented on the condensed consolidated balance sheets are:

	(Amounts in $’000s)
2025 (six month period)	$	199
2026		397
2027		397
2028		99
Total	$	1,092
Less Interest		(63	)
Total operating lease liability	$	1,029

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 six-month periods ended June 30, 2025 and 2024, was $110,000 and $107,000, respectively. Rental expense under the leases for the three-month periods ended June 30, 2025 and 2024, were $55,000 and $53,000, respectively.