Strawberry Inc.

Annual / Quarterly Financial Statement • Feb 8, 2025

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM 8-K/A

CURRENT REPORT

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

Date of Report (Date of earliest event reported) February 7, 2025 (December 19, 2024)

Strawberry Fields REIT, Inc.

(Exact name of registrant as specified in its charter)

Maryland 001-41628 84-2336054 (State or other jurisdiction of incorporation)

6101 Nimtz Parkway South Bend, Indiana 46628 (Address of principal executive offices) (Zip Code)

(Commission file number)

(IRS employer identification no.)

(574) 807-0800

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1933 (§240.12b-2 of this chapter)

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. ☐

This Amendment on Form 8-K/A (this "Amendment") is being filed to amend the Current Report on Form 8-K (the "Initial Form 8-K") filed by Strawberry Fields REIT, Inc. (the "Company") with the Securities and Exchange Commission on December 20, 2024. As previously reported in the Initial Form 8-K, on December 19, 2024, the Company completed its acquisition of 8 healthcare facilities located in Missouri. In the Initial Form 8-K, the Company stated its intention to file the financial statements and pro forma financial information required by parts (a) and (b) of Item 9.01 of Form 8-K not later than seventy-one (71) calendar days after the date that the Initial Form 8-K was required to be filed with the Securities and Exchange Commission. Pursuant to the instructions to Item 9.01 of Form 8-K, the Company hereby files this Amendment to amend the Initial Form 8-K in order to include the required financial statements and pro forma financial information that were previously omitted.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

Missouri Properties Group Combined Statements of Revenues and Certain Expenses for the Year ended December 31, 2023 and the Nine Months Period ended September 30, 2024.

Independent Auditor's Report	F-1
Combined Statements of Revenues and Certain Expenses	F-3
Notes to Combined Statements of Revenues and Certain Expenses	F-4
(b) Pro Forma Financial Information.
Unaudited Pro Forma Condensed Combined Financial Information	F-1
Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2024	F-2
Unaudited Pro Forma Condensed Combined Statements of Income For The Nine Months Ended September 30, 2024	F-3
Unaudited Pro Forma Condensed Combined Statements of Income For The Year Ended December 31, 2023	F-4
Notes to Unaudited Pro Forma Condensed Combined Financial Information	F-5
(d) Exhibits

Exhibit No. Description of Exhibit

• 99.1 Missouri Properties Group Combined Statements of Revenues and Certain Expenses for the Year ended December 31, 2023 and the Nine Month Period ended September 30, 2024
• 99.2 Unaudited Pro Forma Condensed Combined Financial Information
• 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Strawberry Fields REIT, Inc.

Dated: February 7, 2025 By: /s/ Moishe Gubin Moishe Gubin Chief Executive Officer and Chairman

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Exhibit 99.1

Missouri Properties Group Combined Statements of Revenues and Certain Expenses for the Two Month Period ended December 31, 2023 and the Nine Month Period ended September 30, 2024

Report of Independent Auditor

To Missouri Portfolio Group:

We have audited the combined statements of revenues and certain expenses (the "Statements") of the Missouri Portfolio Group for the year ending December 31, 2023 and for the nine months period ended September 30, 2024, and the related notes to the combined financial statements.

In our opinion, the accompanying combined financial statements present fairly, in all material respects, the combined statement of revenues and certain expenses of Missouri Portfolio Group for the year ending December 31, 2023 and for the nine months period ended September 30, 2024, and the related notes to the combined financial statements in accordance with the basis of accounting described in Note 2.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Combined Financial Statements section of our report. We are required to be independent of the Missouri Portfolio Group and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter — Basis of Accounting

As discussed in notes to the combined financial statements, the accompanying combined financial statements were prepared for the purpose of complying with certain rules and regulations of the Securities and Exchange Commission for inclusion in the registration statement of Strawberry Fields REIT, Inc., as described in Note 2 and are not intended to be a complete presentation of the Missouri Portfolio Group's combined revenue and expenses.

Responsibilities of Management for the Combined Financial Statements

Management is responsible for the preparation and fair presentation of the combined financial statements in accordance with the basis of accounting described in Note 2, and for determining that the basis of accounting is an acceptable basis for the preparation of the combined financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of the combined financial statements that are free from material misstatement, whether due to fraud or error.

Missouri Portfolio Group Page Two

Auditor's Responsibilities for the Audit of the Combined Financial Statements

Our objectives are to obtain reasonable assurance about whether the combined financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of certain internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the combined financial statements.

In performing an audit in accordance with GAAS, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the combined financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the combined financial statements.
• Obtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Missouri Portfolio Group's internal controls. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the combined financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Missouri Portfolio Group's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

/s/ Hacker, Johnson & Smith PA

HACKER, JOHNSON & SMITH PA Tampa, Florida December 19, 2024

MISSOURI PORTFOLIO GROUP COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES YEAR ENDED DECEMBER 31, 2023 AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2024 (Dollars in Thousands)

	Year Ended December 31, 2023	Nine Months Period Ended September 30, 2024
Revenues:
Rental revenue	\$	8,539	6,554
Certain expense:
Property insurance		55	49
Revenue In Excess of Certain Expenses	\$	8,484	6,505

See accompanying notes to combined statements of revenue and certain expenses.

MISSOURI PORTFOLIO GROUP NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES YEAR ENDED DECEMBER 31, 2023 AND NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2024

NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Missouri Portfolio Group (the "Portfolio Group"), which is not a legal entity, but rather a combination of certain real estate entities and operations as described below, is engaged in the business of owning and leasing certain healthcare facilities located in the State of Missouri. The accompanying combined statements of revenue and certain expenses (the "Statements") relate to the operations of the Properties Group, consisting of leasing 8 skilled nursing facilities with 1,111 licensed beds (the "Facilities") located in Missouri. The Facilities are owned by GAHC4 Kansas City MO SNF, LLC, GAHC4 Salisbury MO SNF, LLC, GAHC4 Florissant MO SNF, LLC, GAHC4 Sedalia MO SNF, LLC, GAHC4 Milan MO SNF, LLC, GAHC4 Trenton MO SNF, LLC, GAHC4 Moberly MO SNF, LLC, GAHC4 St. Elizabeth MO SNF, LLC (collectively, the "Sellers"), all of which are affiliates of the GAHC4 Missouri SNF Portfolio, LLC.

On October 8, 2024, the Sellers and Strawberry Fields REIT Inc. (the "Purchaser") entered into a Purchase and Sale Agreement (the "Purchase Agreement"), pursuant to with the Purchaser agreed to purchase the Facilities. The Purchaser will assign the right to acquire the Facilities to newly organized indirect subsidiaries of the Strawberry Fields Realty, LP, the Purchaser's operating partnership. The purchase price for the Facilities is \$87.5 million, payable at the closing. The Purchaser completed the acquisition on December 19, 2024.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying combined statements of revenue and certain expenses have been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended. Accordingly, the statements are not representative of the actual results of operations for the periods presented as revenues and certain expenses, which may not be directly attributable to the revenue and expenses to be incurred in the future operations of the Portfolio Group, have been excluded. Such excluded items include depreciation and amortization, interest expense, related party fees, management fees, non-recurring professional fees, and other miscellaneous revenue and expenses not directly related to the proposed future operations of the Portfolio Group.

Revenue Recognition

Rental and escalation income from operating real estate is derived from the leasing of healthcare facilities to tenants/operators. The leases are for fixed terms and provide for annual rentals and expense reimbursements to be paid in monthly installments. Rental revenues relating to non-contingent leases that contain specified rental increases over the life of the lease are recognized on the straight-line basis. Recognizing income on a straight-line basis requires the Facilities to calculate the total non-contingent rent

MISSOURI PORTFOLIO GROUP NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES, CONTINUED

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Revenue Recognition (Cont.)

containing specified rental increases over the life of the lease and to recognize the revenue evenly over that life. This method results in rental income in the early years of a lease being higher than actual cash received. At some point during the lease, depending on its terms, the cash rent payments eventually exceed the straight-line rent which results in the straight-line rent receivable asset decreasing to zero over the remainder of the lease term. The Portfolio Group assesses the collectability of straight-line rent in accordance with the applicable accounting standards and reserve policy. If the lessee becomes delinquent in rent owed under the terms of the lease, the Portfolio Group may provide a reserve against the recognized straight-line rent receivable asset for a portion, up to its full value, that the Portfolio Group estimates may not be recoverable.

Use of Estimates

The preparation of the Statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that could affect the amounts of reported revenues and certain operating expenses. Actual results could differ from those estimates.

Commitments and Contingencies

The Portfolio Group may be subject to legal claims and disputes in the ordinary course of business. Management believes any settlement of any existing potential claims and dispute would not have a material impact on the Portfolio Groups revenues and certain expenses.

NOTE 3. MINIMUM FUTURE LEASE RENTALS

There is a master lease agreement with the tenant to lease the Facilities. As of September 30, 2024, the minimum future cash rents receivable under noncancelable operating leases in each of the next five years and thereafter are as follows (dollars in thousands):

Years Ending:
2024 (three-month period)	\$ 2,233
2025	9,000
2026	9,270
2027	9,549
2028	9,835
Thereafter	50,868
Total	\$ 90,755

NOTE 4. TENANT CONCENTRATIONS

For the year ended December 31, 2023 and the nine months period ended September 30, 2024, no single tenant accounted for a significant amount of rental revenue.

NOTE 5. SUBSEQUENT EVENTS

Management has evaluated the events and transactions that have occurred through December 19, 2024, the date which the Statements were available to be issued, and noted no items requiring adjustment of the Statements or additional disclosure.

Exhibit 99.2

Unaudited Pro Forma Condensed Combined Financial Information

On October 8, 2024, the Company entered into a Purchase and Sale Agreement (the "Purchase Agreement"), with GAHC4 Kansas City MO SNF, LLC, GAHC4 Salisbury MO SNF, LLC, GAHC4 Florissant MO SNF, LLC, GAHC4 Sedalia MO SNF, LLC, GAHC4 Milan MO SNF, LLC, GAHC4 Trenton MO SNF, LLC, GAHC4 Moberly MO SNF, LLC, GAHC4 St. Elizabeth MO SNF, LLC, (collectively, the "Sellers") with respect to the purchase of eight healthcare Facilities located in Missouri (the "Facilities"). The Sellers are not affiliates of the Company. The Company assigned the right to acquire the Facilities to newly organized indirect subsidiaries of the Strawberry Fields Realty, LP, the Company's operating partnership. The Company closed on the acquisition of the Facilities on December 19, 2024.

The purchase price for the Facilities was \$87,500,000. The Company made a deposit of \$2,500,000 under the Purchase Agreement, which was applied to pay a portion of the purchase price at the closing. The Company paid the balance of the purchase price utilizing funds provided by a third-party lender and the Company's working capital.

The Facilities are currently leased under an initial 15-year master lease agreement to a group of third party tenants; the lease is currently in its sixth year. Under the master lease, (i) the tenants are currently on a triple net basis (ii) the tenants have 2 ten-year options to extend the lease. The material terms of the master lease will not be modified as a result of the purchase of the Facilities. The tenants operate the Facilities as skilled nursing facilities.

The eight Facilities are comprised of 1,111 licensed beds.

The unaudited pro forma condensed combined balance sheet as of September 30, 2024 is presented as if the acquisition was completed on September 30, 2024. The unaudited pro forma condensed combined statement of income for the year ended December 31, 2023, and for the nine months ended September 30, 2024 are presented as if the acquisition was completed on January 1, 2023.

The following unaudited pro forma condensed combined financial information has been prepared to comply with Article 11 of Regulation S-X, as promulgated by the SEC. The unaudited pro forma condensed combined financial information should be read in conjunction with the consolidated financial statements of the Company and notes thereto presented elsewhere in this prospectus for the nine months ended September 30, 2024, and for the year ended December 31, 2023 and the combined statement of revenues and certain expenses for the year ending December 31, 2023 and for the nine months period ended September 30, 2024 of the Missouri Portfolio Group. The unaudited pro forma condensed combined balance sheet and condensed combined statement of income are not necessarily indicative of what the actual financial position and operating results would have been had the acquisition had occurred on the dates indicated nor are they indicative of future operating results of the Company.

Unaudited Pro Forma Condensed Combined Balance Sheet AS OF SEPTEMBER 30, 2024 (In thousands)

	Strawberry Fields REIT Inc.		Missouri Property Acquisition
					Proforma	Proforma Combined
Assets					Adjustments
Real estate investments, net	\$	528,741	\$	87,500(a)	-	\$	616,241
Cash and cash equivalents		29,286		(87,500)(b)	87,500(b)		29,286
Restricted cash and equivalents		23,963		-	-		23,963
Straight-line rent receivable, net		26,335		-	-		26,335
Right of use lease asset		1,290		-	-		1,290
Goodwill, other intangible assets and lease rights		23,286		-	-		23,286
Deferred financing expenses		5,547		-	708(c)		6,255
Notes receivable, net		16,819		-	-		16,819
Other assets		6,278		-	-		6,278
Total Assets		661,545		-	88,208		749,753
Liabilities
Accounts payable and accrued liabilities		13,004		-	-		13,004
Bonds, net		150,786		-	-		150,786
Notes payable and other debt		428,843		-	59,000(d)		487,843
Operating lease liability		1,290		-	-		1,290
Other liabilities		12,403		-	-		12,403
Total Liabilities		606,326		-	59,000		665,326
Equity
Additional paid in capital		10,350		-	29,208(e)		39,558
Accumulated other comprehensive income		925		-	-		925
Retained earnings		1,339		-	-		1,339
Total Stockholders' Equity		12,614		-	29,208		41,822
Non-controlling interest		42,605		-	-		42,605
Total Equity		55,219		-	29,208		84,427
Total Liabilities and Equity	\$	661,545	\$	-	\$ 88,208	\$	749,753

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

Unaudited Pro Forma Condensed Combined Statements of Income FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 (In thousands)

	Strawberry Fields REIT Inc.		Missouri Property Acquisition	Proforma Adjustments	Proforma Combined
Revenues
Rental revenues	\$ 86,570	\$	6,554(f)	179(g)	\$	93,303
Expenses:
Depreciation	21,348		-	1,683(h)		23,031
Amortization	3,318		-	-		3,318
General and administrative expenses	5,064		49	-		5,113
Property taxes	10,650		-	179(g)		10,829
Facility rent expenses	577		-	-		577
Total expenses	40,957		49	1,862		42,868
Income from operations	45,613		6,505	(1,683)		50,435
Interest expense, net	(24,028)		-	(3,522)(d)		(27,550)
Amortization of deferred financing costs	(488)		-	(106)(c)		(594)
Mortgage insurance premium	(1,164)		-	-		(1,164)
Total interest expense	(25,680)		-	(3,628)		(29,308)
Net income	\$ 19,933	\$	6,505	\$ (5,311)	\$	21,127

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

Unaudited Pro Forma Condensed Combined Statements of Income FOR THE YEAR ENDED DECEMBER 31, 2023 (In thousands)

	Strawberry Fields REIT Inc.	Missouri Property Acquisition	Proforma Adjustments	Proforma Combined
Revenues
Rental revenues	\$ 99,805	\$ 8,539(f)	238(g)	\$ 108,582
Expenses:
Depreciation	26,207	-	2,244(h)	28,451
Amortization	3,028	-	-	3,028
Loss on real estate investment impairment	2,451	-	-	2,451
General and administrative expenses	5,662	55	-	5,717
Property taxes	14,459	-	238(g)	14,697
Facility rent expenses	559	-	-	559
Total expenses	52,366	55	2,482	54,903
Income from operations	47,439	8,484	(2,244)	53,679
Interest expense, net	(24,443)	-	(4,696)(d)	(29,139)
Amortization of deferred financing costs	(560)	-	(142)(c)	(702)
Mortgage insurance premium	(1,671)	-	-	(1,671)
Total interest expense	(26,674)	-	(4,838)	(31,512)
Other income (loss):
Foreign currency transaction gain	462	-	-	462
Other loss	(983)	-	-	(983)
Total other loss	(521)	-	-	(521)
Net income	\$ 20,244	\$ 8,484	(7,082) \$	\$ 21,646

See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information

$$\underline{\text{F4}}$$

Notes to Unaudited Pro Forma Condensed Combined Financial Information

1. Basis of Presentation

On December 19, 2024, Strawberry Fields REIT Inc. (the "Company') completed the acquisition with multiple sellers with respect to the purchase of eight healthcare facilities located in Missouri (the "Facilities"). The sellers are not affiliates of the Company. The Company will assign the right to acquire the Facilities to newly organized indirect subsidiaries of Strawberry Fields Realty, LP, the Company's operating partnership.

The historical financial statements have been adjusted in the pro forma condensed combined financial statements to give effect for (i) transaction accounting adjustments (ii) autonomous entity adjustments and (iii) management's adjustments, as required.

The pro forma combined financial information does not necessarily reflect what the combined company's financial condition or results of operations would have been if the acquisition of the Missouri Portfolio Group occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

2. Purchase Price Allocation

The Company intends to account for the planned acquisition as an asset acquisition. We will measure the value of the acquired physical assets (land, building and building improvements, site improvements, and furniture fixtures and equipment) by allocating the total cost of the acquisition on a relative fair value basis. The Company expects to allocate the total cost as follows (in thousands):

Land	\$ 2,186
Building and building improvements	85,314
Total purchase price	\$ 87,500

3. Pro Forma Adjustments

• (a) Represents the adjustment to record the assets purchased in the acquisition of the Facilities at relative fair value based on the total cost of the acquisition.
• (b) Represents the cash and cash equivalents to be utilized to pay the purchase price for the Facilities at closing.
• (c) Represents debt issuance costs of \$708.0 thousand related to the funding of the acquisition that are deferred and recorded as a reduction of the related debt liability and amortized to interest expense over the remaining term of the related debt liability utilizing the interest method.
• (d) Represents the borrowing under a new commercial bank mortgage facility to be established by the Company, which will be utilized to fund a portion of the acquisition price. Loans under the facility bear interest at the Secured Overnight Financing Rate ("SOFR") plus a margin of 3.0% and mature in 5 years from the date of the loans. For purposes of the pro forma statements of income, the interest rate is assumed to be 7.96%, which is equal to SOFR plus the 3.0% margin on September 30, 2024.
• (e) Represents the \$35.0 million raised in December 2024 through a follow-on offering of Strawberry Fields REIT Inc. ("STRW") stock.
• (f) Represents straight-line monthly income for the period stated. The Company recognizes rental revenue for operating leases on a straight-line basis over the lease term when collectability is reasonably assured and the tenant has taken possession or controls the physical use of a leased asset.
• (g) Represents real estate taxes for the stated period. The Company reports revenues and expenses within our triple-net leased properties for real estate taxes that are escrowed and obligations of the tenants in accordance with their respective leases with us.
• (h) Real estate costs related to the acquisition and improvement of properties are capitalized and depreciated over the expected life of the asset on a straight-line basis. The Company considers the period of future benefit of an asset to determine its appropriate useful life. Expenditures for tenant improvements are capitalized and amortized over the shorter of the tenant's lease term or expected useful life. The Company anticipates the estimated useful lives of its assets by class to be generally as follows:

Building and improvements	7-53 years
Equipment and personal property	1-14 years