UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2026

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

For the transition period from _______________________ to __________

Commission File Number: 001-41628

Strawberry Fields REIT, Inc.

(Exact name of registrant as specified in its charter)

Maryland		84-2336054
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

6101 Nimtz Parkway, South Bend, IN, 46628

(Address of principal executive offices)

(574) 807-0800

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.0001 per share		STRW		NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 13,426,610 shares of common stock, $0.0001 par value, issued and outstanding as of May 8, 2026.

STRAWBERRY FIELDS REIT, INC.

FORM 10-Q

March 31, 2026

TABLE OF CONTENTS

		Page No.
PART I	Financial Information	3

Item 1.	Condensed Financial Statements of Strawberry Fields REIT, Inc.:	3
	Condensed Consolidated Balance Sheets March 31, 2026 (unaudited) and December 31, 2025	3
	Condensed Consolidated Statements of Income and Comprehensive Income (unaudited) three months ended March 31, 2026 and 2025	4
	Condensed Consolidated Statements of Equity (unaudited) three months ended March 31, 2026 and 2025	5
	Condensed Consolidated Statements of Cash Flows (unaudited) three months ended March 31, 2026 and 2025	6
	Notes to Condensed Consolidated Financial Statements March 31, 2026 (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46

Item 4.	Controls and Procedures	47

PART II	Other Information	48

Item 1.	Legal Proceedings	48

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Repurchases of Equity Securities	49

	Signatures	50

PART I – FINANCIAL INFORMATION

Item 1 - Financial Statements

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in $000’s, except share data)

	March 31, 2026			December 31, 2025
		(unaudited)
Assets
Real estate investments, net	$	677,911		$	687,151
Cash and cash equivalents		36,551			31,812
Restricted cash and equivalents		33,107			34,946
Straight-line rent receivable, net		36,893			34,804
Operating lease right of use lease assets		760			851
Goodwill, other intangible assets and lease rights		66,139			68,352
Deferred financing expenses		5,258			5,358
Notes receivable, net		20,978			20,821
Other assets		1,034			1,130
Total Assets	$	878,631		$	885,225

Liabilities
Accounts payable and accrued liabilities	$	16,094		$	22,369
Bonds, net		333,945			330,612
Note payable		40,428			42,624
Senior debt		413,599			417,262
Operating lease liabilities		760			851
Other liabilities		23,171			20,983
Total Liabilities	$	827,997		$	834,701
Commitments and Contingencies (Note 8)		-			-
Equity
Preferred stock, $.0001 par value, 100,000,000 shares authorized, no shares issued and outstanding	$	-		$	-
Common stock, $.0001 par value, 500,000,000 shares authorized, 13,398,307 and 13,257,425 shares issued and outstanding		1			1
Additional paid in capital		19,131			18,554
Accumulated other comprehensive loss		(8,278	)		(7,682	)
Retained earnings		1,373			1,233
Total Stockholders’ Equity	$	12,227		$	12,106
Non-controlling interest	$	38,407		$	38,418
Total Equity	$	50,634		$	50,524
Total Liabilities and Equity	$	878,631		$	885,225

See accompanying notes to condensed consolidated financial statements.

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(unaudited)

(Amounts in $000’s, except share and per share data)

	2026			2025
	Three Months Ended March 31,
	2026			2025

Revenues
Rental revenues	$	39,984		$	37,333

Expenses:
Depreciation	$	9,240		$	8,682
Amortization		2,213			2,588
General and administrative expenses		2,522			2,057
Property taxes		3,737			3,651
Facility rent expenses		129			149
Total expenses	$	17,841		$	17,127

Income from operations		22,143			20,206

Interest expense, net	$	(12,086	)	$	(12,636	)
Amortization of deferred financing costs		(201	)		(200	)
Mortgage insurance premium		(382	)		(387	)
Total interest expense	$	(12,669	)	$	(13,223	)
Other Income	$	-		$	8
Net income	$	9,474		$	6,991
Less:
Net income attributable to non-controlling interest		7,194			5,407
Net income attributable to common stockholders		2,280			1,584
Other comprehensive income:
(Loss) gain due to foreign currency translation		(2,475	)		4,074
Comprehensive income attributable to non-controlling interest		1,879			(3,151	)
Comprehensive income	$	1,684		$	2,507
Net income attributable to common stockholders		2,280			1,584
Basic and diluted income per common share	$	0.17		$	0.13
Weighted average number of common shares outstanding		13,344,741			12,196,122

See accompanying notes to condensed consolidated financial statements

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Amounts in $000’s, except share data)

	Number of common shares		Common Stock at Par		Additional Paid-in Capital			Accumulated other comprehensive income			Retained Earnings			Non- controlling interest			Total

Balance, December 31, 2024		12,062,309	$	1	$	16,535		$	340		$	1,292		$	65,403		$	83,571
Issuance of common stock in exchange for OP units (unaudited)		250,000		-		-			-			-			-			-
ATM common stock sales (unaudited)		190,972		-		2,244			-			-			-			2,244
Employee common stock bonus (unaudited)		6,450		-		72			-			-			-			72
Stock Based Compensation (unaudited)
OP Units Retirement		-		-		-			-			-			(2,026	)		(2,026	)
Dividends (unaudited)		-		-		-			-			(1,714	)		-			(1,714	)
Non-controlling interest distributions (unaudited)		-		-		-			-			-			(6,020	)		(6,020	)
Net change in foreign currency translation (unaudited)		-		-		-			923			-			3,151			4,074

Reallocation of non-controlling interest (unaudited)		-		-		(1,659	)		-			-			1,659			-
Net income (unaudited)		-		-		-			-			1,584			5,407			6,991
Balance, March 31, 2025 (unaudited)		12,509,731	$	1	$	17,192		$	1,263		$	1,162		$	67,574		$	87,192

Balance, December 31, 2025		13,257,425	$	1	$	18,554		$	(7,682	)	$	1,233		$	38,418		$	50,524
Balance		13,257,425	$	1	$	18,554		$	(7,682	)	$	1,233		$	38,418		$	50,524

Issuance of common stock in exchange for OP units (unaudited)		100,000		-		-			-			-			-			-
ATM common stock sales (unaudited)		34,207		-		441			-			-			-			441
Employee common stock bonus (unaudited)		6,675		-		88			-			-			-			88
Stock Based Compensation (unaudited)		-		-		-			-			-			1,500			1,500
Dividends (unaudited)		-		-		-			-			(2,140	)		-			(2,140	)
Non-controlling interest distributions (unaudited)		-		-		-			-			-			(6,778	)		(6,778	)
Net change in foreign currency translation (unaudited)		-		-		-			(596	)		-			(1,879	)		(2,475	)
Reallocation of non- controlling interest (unaudited)		-		-		48			-			-			(48	)		-
Net income (unaudited)		-		-		-			-			2,280			7,194			9,474
Balance, March 31, 2026 (unaudited)		13,398,307	$	1	$	19,131		$	(8,278	)	$	1,373		$	38,407			50,634
Balance		13,398,307	$	1	$	19,131		$	(8,278	)	$	1,373		$	38,407			50,634

See accompanying notes to condensed consolidated financial statements

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Amounts in $000’s)

	2026			2025
	Three Months Ended March 31,
	2026			2025

Cash flows from operating activities:
Net income	$	9,474		$	6,991
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		11,453			11,270
Amortization of bond issuance costs		684			973
Amortization of deferred financing costs		201			200
Stock based compensation		1,588			72
Decrease (increase) in other assets		96			(285	)
Amortization of right of use assets		91			87
Foreign currency translation adjustments		174			(655	)
Increase in straight-line rent receivables		(2,089	)		(1,457	)
(Decrease) increase in accounts payable and accrued liabilities and other liabilities		(4,087	)		1,857
Decrease of operating lease liabilities		(91	)		(87	)
Net cash provided by operating activities	$	17,494		$	18,966

Cash flow from investing activities:
Purchase of real estate investments	$	-		$	(29,000	)
(Increase) decrease in notes receivable		(157	)		237
Net cash used in investing activities	$	(157	)	$	(28,763	)

Cash flows from financing activities:
Proceeds from issuance ATM Sales, net	$	441		$	2,244
Deferred financing costs		(101	)		-
Repayment of senior debt		(3,663	)		(3,269	)
Repayment of Note Payable		(2,196	)		(1,988	)
Payment of dividends		(2,140	)		(1,714	)
Non-controlling interest distributions		(6,778	)		(6,020	)
OP Unit Retirement		-			(2,026	)
Net cash used in financing activities	$	(14,437	)	$	(12,773	)
Increase (decrease) in cash and cash equivalents and restricted cash and equivalents	$	2,900		$	(22,570	)
Cash and cash equivalents and restricted cash and equivalents at the beginning of the period	$	66,758		$	93,656
Cash and cash equivalents and restricted cash and equivalents at the end of the period	$	69,658		$	71,086

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited), continued

(Amounts in $000’s)

	Three Months Ended March 31,
	2026			2025
Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for interest	$	14,949		$	16,126
Supplemental schedule of noncash activities:
Accumulated other comprehensive income:
Foreign currency translation adjustments	$	(2,475	)	$	4,074
Note payable in exchange for acquisition of intangible asset	$	-		$	50,880
Transfer of accrued stock based compensation to equity	$	1,615		$	-

See accompanying notes to condensed consolidated financial statements

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Business

Overview

The Company

STRAWBERRY FIELDS REIT, Inc. (the “Company”) is a Maryland corporation formed in July 2019. The Company commenced operations on June 8, 2021. The Company conducts its business through a traditional UPREIT structure in which substantially all of its assets are owned by subsidiaries of Strawberry Fields Realty, LP, a Delaware limited partnership formed in July 2019 (the “Operating Partnership”). The Company is the general partner of the Operating Partnership (“OP”). The Company owns approximately 24.2% and 24.0% of the outstanding OP units as of March 31, 2026 and December 31, 2025 respectively.

As the sole general partner of the Operating Partnership, the Company has the exclusive power under the partnership agreement to manage and conduct the business affairs of the Operating Partnership, subject to certain limited approval and voting rights of the limited partners. The Company may cause the Operating Partnership to issue additional OP units in connection with property acquisitions, compensation or otherwise. The Company became a publicly traded entity on September 21, 2022.

The Company is engaged in the ownership, acquisition, financing and triple-net leasing of skilled nursing facilities and other post-acute healthcare properties. As of March 31, 2026, the Company’s portfolio consists of 132 healthcare properties and one leased property that is in turn leased to a tenant that operates the facilities. As of December 31, 2025, the company owned 132 properties and leased one property that it in turn subleased to a tenant that operates the facility. The current portfolio properties are located in Arkansas, Illinois, Indiana, Kansas, Kentucky, Missouri, Ohio, Oklahoma, Tennessee and Texas. The Company generates substantially all of its revenues by leasing its properties to tenants under long-term leases primarily on a triple-net basis, under which the tenant pays the cost of real estate taxes, insurance and other operating costs of the facility and capital expenditures. Each healthcare facility located at its properties is managed by a qualified operator with an experienced management team.

Interim Condensed Consolidated Financial Statements

The accompanying unaudited, condensed consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial information, and the Securities and Exchange Commission (“SEC”) rules for interim financial reporting. Certain information and footnote disclosures normally included in the condensed consolidated financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, in the opinion of management, the accompanying interim condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the Company’s condensed consolidated financial position as of March 31, 2026, and the condensed consolidated results of operations and cash flows for the periods presented. The condensed consolidated results of operations for interim periods are not necessarily indicative of the results of operations to be expected for any subsequent interim period or for the fiscal year ending December 31, 2026.

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Business (Cont.)

Variable Interest Entity

The Company consolidates the Operating Partnership, a variable interest entity (“VIE”) in which the Company is considered the primary beneficiary. The primary beneficiary is the entity that has (i) the power to direct the activities that most significantly impact the entity’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE.

Non-Controlling Interest

A non-controlling interest is defined as the portion of the equity in an entity not attributable, directly or indirectly, to the primary beneficiary. Non-controlling interests are required to be presented as a separate component of equity on a condensed consolidated balance sheet. Accordingly, the presentation of net income is modified to present the income attributed to controlling and non-controlling interests. The non-controlling interest on the Company’s condensed consolidated balance sheets represents OP units not held by the Company and represents approximately 75.8% and 76.0% of the outstanding OP Units issued by the Operating Partnership as of March 31, 2026 and December 31, 2025, respectively. OP Units are exchangeable 1 to 1 with shares of common stock. The holders of these OP units are entitled to share in cash distributions from the Operating Partnership in proportion to their percentage ownership of OP units. Net income is allocated to non-controlling interest based on the weighted average of OP units outstanding during the period.

Basis of Presentation

The Company maintains its accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. Summary of Significant Accounting Policies

Fiscal Year End

The Company has adopted a fiscal year end of December 31.

Use of Estimates

Management is required to make estimates and assumptions in the preparation of the condensed consolidated financial statements in conformity with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from management’s estimates.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and the Operating Partnership and its wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and short-term investments with original maturities of three months or less when purchased.

The Company’s cash, cash equivalents and restricted cash and cash equivalents periodically exceed federally insurable limits. The Company monitors the cash balances in its operating accounts and adjusts the cash balances as appropriate; however, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, the Company has experienced no loss or lack of access to the cash in its operating accounts. On March 31, 2026 and December 31, 2025, the Company had $55.8 million and $53.1 million, respectively, on deposit in excess of federally insured limits.

Restricted Cash and Cash Equivalents

Restricted cash primarily consists of amounts held by mortgage lenders to provide for real estate tax expenditures, tenant improvements, capital expenditures and security deposits, as well as escrow accounts related to principal and interest payments on Bonds.

Real Estate Depreciation

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. The Company does not incur expenditures for tenant improvements as they are the responsibility of the tenant per their respective leases. The Company anticipates the estimated useful lives of its assets by class to be generally as follows:

Schedule of Assets Useful Lives

Building and improvements	7-45 years
Equipment and personal property	2-18 years

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. Summary of Significant Accounting Policies (Cont.)

Real Estate Valuation

In determining fair value and the allocation of the purchase price of acquisitions, the Company uses current appraisals or third-party valuations services. The most significant components of these allocations are typically the allocation of fair value to land and buildings and, for certain of its acquisitions, in place leases and other intangible assets. In the case of the fair value of buildings and the allocation of value to land and other intangibles, the estimates of the values of these components will affect the amount of depreciation and amortization the Company records over the estimated useful life of the property acquired or the remaining lease term. In the case of the value of in place leases, the Company makes best estimates based on the evaluation of the specific characteristics of each tenant’s lease. Factors considered include estimates of carrying costs during hypothetical expected lease up periods, market conditions and costs to execute similar leases. These assumptions affect the amount of future revenue that the Company will recognize over the remaining lease term for the acquired in place leases.

The Company evaluates each purchase transaction to determine whether the acquired assets meet the definition of a business. Transaction costs related to acquisitions that are not deemed to be businesses are included in the cost basis of the acquired assets, while transaction costs related to acquisitions that are deemed to be businesses are expensed as incurred. All of the Company’s acquisitions of investment properties qualified as asset acquisitions during the periods.

Revenue Recognition

Rental income from operating leases is generally recognized on a straight-line basis over the terms of the leases. Substantially all of the Company’s leases contain provisions for specified annual increases over the rents of the prior year and are generally computed in one of three methods depending on specific provisions of each lease as follows:

	(i)	a specified annual increase over the prior year’s rent, generally between 1.0% and 3.0%;

	(ii)	a calculation based on the Consumer Price Index; or

	(iii)	specific dollar increases.

Contingent revenue is not recognized until all possible contingencies have been eliminated. The Company considers the operating history of the lessee and the general condition of the industry when evaluating whether all possible contingencies have been eliminated and have historically, and expect in the future, to not include contingent rents as income until received. The Company follows a policy related to rental income whereby the Company considers a lease to be non-performing after 60 days of non-payment of past due amounts and does not recognize unpaid rental income from that lease until the amounts have been received.

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 us to calculate the total non-contingent rent 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, creating a straight-line rent receivable asset included in our accompanying condensed consolidated balance sheets. 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 Company 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 Company may provide a reserve against the recognized straight-line rent receivable asset for a portion, up to its full value, that the Company estimates may not be recoverable.

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. Summary of Significant Accounting Policies (Cont.)

Revenue Recognition (Cont.)

Capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. Capitalized below-market leases are accreted to rental income over the remaining terms of the respective leases and expected below-market renewal option periods.

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 lease with us.

Gain from sale of real estate investments is recognized when control of the property is being transferred and it is probable that substantially all consideration will be collected.

Allowance for Credit Losses

The Company evaluates the liquidity and creditworthiness of its tenants, operators and borrowers on a monthly and quarterly basis. The Company’s evaluation considers industry and economic conditions, individual and portfolio property performance, credit enhancements, liquidity and other factors. The Company’s tenants, borrowers and operators furnish property, portfolio and guarantor/operator-level financial statements, among other information, on a monthly or quarterly basis; the Company utilizes this financial information to calculate the lease or debt service coverages that it uses as a primary credit quality indicator. Lease and debt service coverage information is evaluated together with other property, portfolio and operator performance information, including revenue, expense, net operating income, occupancy, rental rate, reimbursement trends, capital expenditures and EBITDA (defined as earnings before interest, tax, depreciation and amortization), along with other liquidity measures. The Company evaluates, on a monthly basis or immediately upon a significant change in circumstance, its tenants’, operators’ and borrowers’ ability to service their obligations with the Company.

The Company maintains an allowance for credit losses for straight-line rent receivables resulting from tenants’ inability to make contractual rent and tenant recovery payments or lease defaults. For straight-line rent receivables, the Company’s assessment is based on amounts estimated to be recoverable over the lease term.

Impairment of Long-Lived Assets and Goodwill

The Company assesses the carrying value of real estate assets and related intangibles (“real estate assets”) when events or changes in circumstances indicate that the carrying value may not be recoverable. The Company tests its real estate assets for impairment by comparing the sum of the expected future undiscounted cash flows to the carrying value of the real estate assets. The expected future undiscounted cash flows are calculated utilizing the lowest level of identifiable cash flows that are largely independent of the cash flows of other assets and liabilities. If the carrying value exceeds the expected future undiscounted cash flows, an impairment loss will be recognized to the extent that the carrying value of the real estate assets is greater than their fair value.

Goodwill is tested for impairment at least annually based on certain qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying value. Potential impairment indicators include a significant decline in real estate values, significant restructuring plans, current macroeconomic conditions, state of the equity and capital markets or a significant decline in the Company’s market capitalization. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company applies the required two-step quantitative approach. The quantitative procedures of the two-step approach (i) compare the fair value of a reporting unit with its carrying value, including goodwill, and, if necessary, (ii) compare the implied fair value of reporting unit goodwill with the carrying value as if it had been acquired in a business combination at the date of the impairment test. The excess fair value of the reporting unit over the fair value of assets and liabilities, excluding goodwill, is the implied value of goodwill and is used to determine the impairment amount, if any. The Company has selected the fourth quarter of each fiscal year to perform its annual impairment test.

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. Summary of Significant Accounting Policies (Cont.)

Concentrations of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash and cash equivalents, notes receivable and operating leases on owned properties. These financial instruments are subject to the possibility of loss of carrying value as a result of the failure of other parties to perform according to their contractual obligations or changes in market prices which may make the instrument less valuable. Cash and cash equivalents, restricted cash and equivalents are held with various financial institutions. From time to time, these balances exceed the federally insured limits. These balances are maintained with high quality financial institutions which management believes limits the risk.

With respect to notes receivable, the Company obtains various collateral and other protective rights, and continually monitors these rights, in order to reduce such possibilities of loss. In addition, the Company provides reserves for potential losses based upon management’s periodic review of our portfolio.

On March 31, 2026 and December 31, 2025, the Company held six notes receivable with an outstanding balance of $21.0 and $20.8 million, respectively. The notes have maturities ranging from 2026 through 2046, and interest rates ranging from 2% to 10.25%. One of the notes is collateralized by tenants’ accounts receivable. All other notes receivable are uncollateralized as of March 31, 2026.

Market Concentration Risk

As of March 31, 2026 and December 31, 2025, the Company owned 132 properties and leased one property. The facilities are located in 10 states, with 20 facilities of its total facilities located in Illinois (which include 4,226 skilled nursing and assisted living beds or 27.1% of the Company’s total beds) and 41 of its total facilities in Indiana (which include 3,404 skilled nursing and assisted living beds or 21.8% of the Company’s total beds). Since tenant revenue is primarily generated from Medicare and Medicaid, the operations of the Company are indirectly subject to the administrative directives, rules and regulations of federal and state regulatory agencies, including, but not limited to the Centers for Medicare & Medicaid Services, and the Department of Health and Aging in all states in which the Company operates. Such administrative directives, rules and regulations, including budgetary reimbursement funding, are subject to change by an act of Congress, the passage of laws by the state regulators or an administrative change mandated by one of the executive branch agencies. Such changes may occur with little notice or inadequate funding to pay for the related costs, including the additional administrative burden, to comply with a change.

Debt and Capital Raising Issuance Costs

Costs incurred in connection with the issuance of equity interests are recorded as a reduction of additional paid-in capital. Debt issuance costs related to debt instruments, excluding line of credit arrangements, are deferred, 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. Deferred financing costs related to line of credit arrangements are deferred, recorded as an asset and amortized to interest expense over the remaining term of the related line of credit arrangement utilizing the interest method.

Penalties incurred to extinguish debt and any remaining unamortized debt issuance costs, discounts and premiums are recognized as income or expense in the condensed consolidated statements of income at the time of extinguishment.

Segment Reporting

Accounting guidance regarding disclosures about segments of an enterprise and related information establishes standards for the manner in which public business enterprises report information about operating segments. The Company’s investment decisions in health care properties, and resulting investments are managed as a single operating segment for internal reporting and for internal decision-making purposes. Therefore, the Company has concluded that it operates as a single segment. The Chief Operating Decision Makers for the segment is/ are: Moishe Gubin, Chairman and Chief Executive Officer and Greg Flamion, Chief Financial Officer.

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. Summary of Significant Accounting Policies (Cont.)

Basic and Diluted Income Per Common Share

The Company calculates basic income per common share by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding during the period. At March 31, 2026 and 2025, there were 42,362,059 and 42,999,908 OP units outstanding which were potentially dilutive securities. During the three month periods ended March 31, 2026 and 2025, the assumed conversion of the OP units had no impact on basic income per share.

Foreign Currency Translation and Transactions

Assets and liabilities denominated in foreign currencies that are translated into U.S. dollars use exchange rates in effect at the end of the period, and revenues and expenses denominated in foreign currencies that are translated into U.S. dollars use average rates of exchange in effect during the related period. Gains or losses resulting from translation are included in accumulated other comprehensive loss, a component of equity on the condensed consolidated balance sheets.

Gains or losses resulting from foreign currency transactions are translated into U.S. dollars at the rates of exchange prevailing at the dates of the transactions. The effects of transaction gains or losses, if any, are included in other income, in the condensed consolidated statements of income.

Fair Value Measurement

The Company measures and discloses the fair value of nonfinancial and financial assets and liabilities utilizing a hierarchy of valuation techniques based on whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy:

● Level 1—quoted prices for identical instruments in active markets;

● Level 2—quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

● Level 3—fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company measures fair value using a set of standardized procedures that are outlined herein for all assets and liabilities which are required to be measured at fair value. When available, the Company utilizes quoted market prices from an independent third-party source to determine fair value and classifies such items in Level 1. In instances where a market price is available, but the instrument is in an inactive or over-the-counter market, the Company consistently applies the dealer (market maker) pricing estimate and classifies the asset or liability in Level 2. If quoted market prices or inputs are not available, fair value measurements are based upon valuation models that utilize current market or independently sourced market inputs, such as interest rates, option volatilities, credit spreads and/or market capitalization rates. Items valued using such internally generated valuation techniques are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified in either Level 2 or Level 3 even though there may be some significant inputs that are readily observable. Internal fair value models and techniques used by the Company include discounted cash flow valuation models.

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2. Summary of Significant Accounting Policies (Cont.)

Real Estate Investments – Held for Sale

On March 31, 2026 and December 31, 2025, the Company had one property included in real estate investments which was held for sale and carried at the lower of their net book value or fair value on a non-recurring basis on the condensed consolidated balance sheets. The Company’s real estate investments held for sale were classified as Level 3 of the fair value hierarchy.

Stock-Based Compensation

The Company accounts for share-based payment awards in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in the condensed consolidated financial statements. ASC 718 requires all entities to apply a fair value-based measurement method in accounting for share-based payment transactions. The Company recognizes share-based payments over the vesting period.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Expense Disaggregation Disclosures.” ASU 2024-03 requires disclosure to disaggregate prescribed expenses within relevant income statement captions. The standard is effective for fiscal years beginning after December 15, 2026 and for interim periods after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of the changes to its existing disclosures.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets The ASU provides an optional practical expedient for estimating future credit losses based on current conditions as of the balance sheet date and assuming those conditions do not change over the remaining life of the accounts receivable. This standard is effective January 1, 2026. The Company does not expect this ASU to have a material impact on the condensed consolidated results of operations and financial condition.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU removes references to prescriptive software development stages and includes an updated framework for capitalizing internal software costs. This standard is effective January 1, 2028. The Company is currently evaluating this ASU’s impact on the condensed consolidated results of operations and financial condition

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3. Restricted Cash and Equivalents

The following table presents the Company’s restricted cash and equivalents and escrow deposits:

	March 31,		December 31,
	2026		2025
	(amounts in $000’s)
Escrow with Trustee	$	2,188	$	2,170
MIP escrow accounts		972		790
Other escrow and debt deposits		708		270
Property tax and insurance escrow		3,592		6,815
Interest and expense reserve bonds escrow		12,797		12,696
HUD replacement reserves		12,850		12,205
Total restricted cash and equivalents	$	33,107	$	34,946

Escrow with trustee - The Company transfers funds to the trustee for its Series A, B, C and D bonds to cover principal and interest payments prior to the payment date.

MIP escrow accounts - The Company is required to make monthly escrow deposits for mortgage insurance premiums on the HUD guaranteed mortgage loans.

Other escrow and debt deposits – The Company funds various escrow accounts under certain of its loan agreements, primarily to cover debt service on underlying loans.

Property tax and insurance escrow - The Company funds escrows for real estate taxes and insurance under certain of its loan agreements.

Interest and expense reserve bonds escrow - The indentures for the series A, B, C, and D Bonds require the funding of a six-month interest reserve as well as an expense reserve. See Note 7 – Bonds, Note Payable and Other Debt.

HUD replacement reserves - The Company is required to make monthly payments into an escrow for replacement and improvement of the project assets covered by HUD guaranteed mortgage loans. A portion of the replacement reserves are required to be maintained until the applicable loan is fully paid.

NOTE 4. Real Estate Investments, net

There were no acquisition of properties during the three month period ending March 31, 2026.

On January 1, 2025, the Company entered into a new master lease for 10 Kentucky properties formally part of the Landmark Master Lease. Base rent is $23.3 million a year and is subject to an increase based on CPI with a minimum increase of 2.50%. The initial lease term is 10 years with four 5-year extension options. Also, as part of the negotiation of the new Kentucky Master Lease, Strawberry Fields entered into a 5 year note payable with the parent of the Landmark tenant for $50.9 million dollars, included in bonds, notes payable and other debt in the accompanying condensed consolidated balance sheets.

On January 2, 2025, the Company acquired 6 facilities consisting of 354 beds in Kansas. The acquisition was for $24.0 million and the Company funded the acquisition utilizing the cash from the condensed consolidated balance sheets. The Company formed a new master lease for an initial 10-year period that included two 5-year extension options on a triple-net basis. Additionally, the lease will increase the Company’s annual rents by $2.4 million and is subject to 3% annual increases.

On March 31, 2025, the Company acquired a skilled nursing facility with 100 licensed beds near Oklahoma City, Oklahoma. The acquisition was $5.0 million and was funded utilizing cash from the condensed consolidated balance sheets. The initial term of the lease is 10 years and includes two 5-year extension options. Base rent for the property is $0.5 million dollars annually and is subject to 3% annual increases.

Real estate investments consist of the following:

Schedule of Real Estate Investment

	Estimated Useful Lives		March 31, 2026			December 31, 2025
	(Years)		(Amounts in $000’s)
Buildings and improvements		7-45	$	773,555		$	773,555
Equipment and personal property		2-18		123,072			123,072
Land		-		72,586			72,586
Real estate investments, gross				969,213			969,213
Less: accumulated depreciation				(291,302	)		(282,062	)
Real estate investments, net			$	677,911		$	687,151

For the three-month periods ended March 31, 2026 and March 31, 2025, total depreciation expense was $9.2 million and $8.7 million, respectively.

STRAWBERRY FIELDS REIT, INC. and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5. Intangible Assets and Goodwill

Intangible assets consist of the following goodwill, Certificate of Need (“CON”) licenses and lease rights:

	Goodwill including CON Licenses		Lease Rights			Total
	(Amounts in $000’s)
Balances, December 31, 2024
Gross	$	1,323		78,577			79,900
Accumulated amortization		-		(51,953	)		(51,953	)
Net carrying amount		1,323		26,624			27,947
Acquisition of lease rights		-		50,880			50,880
Amortization		-		(

SEC Form 10-Q filed by Strawberry Fields REIT Inc.