Form 8-K/A - Current report: [Amend]

 

 

 

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): August 28, 2023 (August 25, 2023)

 

 

 

Strawberry Fields REIT, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland		000-56451		84-2336054
(State or Other Jurisdiction		(Commission		(I.R.S. Employer
of Incorporation)		File Number)		Identification No.)

 

6101 Nimtz Parkway

South Bend, Indiana 46628

(Address of Principal Executive Office) (Zip Code)

 

[phone]

(Registrant’s telephone number, including area code)

 

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:

 

☐	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		Trading Symbol(s)		Name of each exchange on which registered
Common stock, $0.00001 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 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by checkmark 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 No. 1 on Form 8-K/A (this “Amendment No. 1”) 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 August 28, 2023. As previously reported in the Initial Form 8-K, on August 25, 2023, the Company completed its acquisition of 24 healthcare facilities located in Indiana (the “WC-Indiana Acquisition”). 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 No. 1 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.

 

WC-Indiana Properties Group Combined Statements of Revenues and Certain Expenses for the Two Month Period ended December 31, 2022 and the Six Month Period ended June 30, 2023

 

Independent Auditor’s Report	F-1
Combined Statements of Revenues and Certain Expenses	F-2
Notes to Combined Statements of Revenues and Certain Expenses	F-3

  

(b)	Pro Forma Financial Information.

 

Unaudited Pro Forma Condensed Combined Financial Information	F-1
Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2023	F-2
Unaudited Pro Forma Condensed Combined Statements of Income For The Year Ended December 31, 2022	F-3
Unaudited Pro Forma Condensed Combined Statements of Income For The Six Months Ended June 30, 2023	F-4
Notes to Unaudited Pro Forma Condensed Combined Financial Information	F-5

 

(d) Exhibits

 

Exhibit No.		Description of Exhibit
99.1		WC-Indiana Properties Group Combined Statements of Revenues and Certain Expenses for the Two Month Period ended December 31, 2022 and the Six Month Period ended June 30, 2023
99.2		Unaudited Pro Forma Condensed Combined Financial Information
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

2

 

 

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: November 7, 2023	By:	/s/ Moishe Gubin
		Moishe Gubin Chief Executive Officer and Chairman

 

3

 

 

Exhibit 99.1

 

WC-Indiana Properties Group Combined Statements of Revenues and Certain Expenses for the Two Month Period ended December 31, 2022 and the Six Month Period ended June 30, 2023

 

Report of Independent Auditor

 

To WC Indiana Properties Group:

 

We have audited the combined statements of revenues and certain expenses (the “Statements”) of the WC-Indiana Properties Group for the two month period ended December 31, 2022 and the six month period ended June 30, 2023, 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 WC-Indiana Properties Group for the two month period ended December 31, 2022 and the six month period ended June 30, 2023, 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 WC-Indiana Properties 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 on Form S-11 of Strawberry Fields REIT, Inc., as described in note 2 and are not intended to be a complete presentation of the WC-Indiana Properties 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 1, 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.

 

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 WC-Indiana Properties 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 WC-Indiana Properties 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.

 

HACKER, JOHNSON & SMITH PA

 

Tampa, Florida

August 14, 2023

 

F-1

 

 

WC-INDIANA PROPERTIES GROUP

 

COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES

 

TWO MONTH PERIOD ENDED DECEMBER 31, 2022 AND SIX MONTH PERIOD ENDED JUNE 30, 2023

 

(Dollars in Thousands)

 

		Two Months Ended December 31 2022				Six Months Ended June 30 2023
Revenues:
Rental revenue		$	2,189				6,725
Certain expense:
Property taxes			78				391
REVENUES IN EXCESS OF CERTAIN EXPENSES		$	2,111				6,334

 

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

 

F-2

 

 

WC-INDIANA PROPERTIES GROUP

 

NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES

 

TWO MONTH PERIOD ENDED DECEMBER 31, 2022 AND SIX MONTH

PERIOD ENDED JUNE 30, 2023

 

NOTE 1.

ORGANIZATION AND DESCRIPTION OF BUSINESS

 

WC-Indiana Properties Group (the “Properties 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 Indiana. The accompanying combined statements of revenue and certain expenses (the “Statements”) relate to the operations of the Properties Group, consisting of leasing 19 skilled nursing facilities with 1,659 licensed beds and 5 assisted living facilities with 193 beds, of which 29 beds are licensed (the “Facilities”). The Facilities are owned by WC-Castleton LLC, WC-Chesterfield LLC, WC-Columbia City LLC, WC-Dunkirk LLC, WC-Fort Wayne LLC, WC-Hartford City LLC, WC-Hobart LLC, WC-Huntington LLC, WC-Lagrange LLC, WC-Middletown LLC, WC-Peru LLC, WC-Rockport LLC, WC-Rushville LLC, WC-Sullivan LLC, WC-Syracuse LLC, WC-Tipton LLC, WC-Wabash LLC and WC-Wakarusa LLC (collectively, the “Sellers”), all of which are affiliates of the WC-Indiana, LLC.

 

On June 8, 2023, 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 is not an affiliate of the Sellers. 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 $102.0 million, payable at the closing. Under the Purchase Agreement, the Purchaser will also make a loan of approximately $6.5 million to the Properties, which will be scheduled to be repaid within 60 days of the closing. The Purchaser anticipates closing the acquisition in August 2023; however, there are no assurance that the closing will occur within this timeframe, or at all. The potential acquisition of these Facilities is subject to substantial conditions to closing.

 

The accompanying combined statements of revenues and certain expenses (the “Statements”) relate to the operations of the Properties.

 

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 Properties 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 Properties Group.

 

F-3

 

 

Revenue Recognition

 

Rental income from the Facilities is derived from the leasing of healthcare facilities to tenants/operators under a master lease. The lease is for a fixed term and provides for annual rentals and expense reimbursements to be paid in monthly installments. Rental revenues relating to the lease, which contains 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 Properties Group 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. 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 Properties Group assesses the collectability of straight-line rent in accordance with the applicable accounting standards and reserve policy. If the lessees becomes delinquent in rent owed under the terms of the lease, the Properties Group may provide a reserve against the recognized straight-line rent receivable asset for a portion, up to its full value, that the Properties Group estimates may not be recoverable

 

NOTE 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

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 Properties 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 Properties Group’s revenues and certain expenses.

 

NOTE 3.

MINIMUM FUTURE LEASE RENTALS

 

The Facilities are leased under a master lease agreement with a group of tenants. As of June 30, 2023, the minimum future cash rents receivable under this non-cancelable operating lease in each of the next five years and thereafter are as follows (dollars in thousands):

 

Years Ending:
2023 (six-month period)		$	4,750
2024			9,854
2025			12,065
2026			14,324
2027			14,611
Thereafter			27,528
Total		$	83,132

 

NOTE 4.

TENANT CONCENTRATIONS

 

For the two month period ended December 31, 2022 and the six month period ended June 30, 2023, the properties were leased under a master lease to a group of related tenants. 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 August 14, 2023, the date which the Statements were available to be issued, and noted no items requiring adjustment of the Statements.

 

F-4

 

 

Exhibit 99.2

 

Unaudited Pro Forma Condensed Combined Financial Information

 

On June 8, 2023, Strawberry Fields REIT Inc (the “Company”) entered into a Purchase and Sale Agreement (the “Purchase Agreement”), with WC-Castleton LLC, WC-Chesterfield LLC, WC-Columbia City LLC, WC-Dunkirk LLC, WC-Fort Wayne LLC, WC-Hartford City LLC, WC-Hobart LLC, WC-Huntington LLC, WC-Lagrange LLC, WC-Middletown LLC, WC-Peru LLC, WC-Rockport LLC, WC-Rushville LLC, WC-Sullivan LLC, WC-Syracuse LLC, WC-Tipton LLC, WC-Wabash LLC and WC-Wakarusa LLC (collectively, the “Sellers”) with respect to the purchase of 24 healthcare facilities located in Indiana (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 the Strawberry Fields Realty, LP, the Company’s operating partnership.

 

The purchase price for the Facilities is $102.0 million, payable at the closing. The Company has made a deposit of $4.0 million under the Purchase Agreement, which will be applied to pay a portion of the purchase price at the closing. The Company plans to pay the balance of the purchase price utilizing funds provided by a third-party lender and the Company’s current working capital.

 

Under the Purchase Agreement, the Company will also make a loan of approximately $6.5 million to the Sellers, which will be due and payable within 60 days of the closing.

 

The Facilities are currently leased under an initial seven-year master lease agreement to a group of tenants affiliated with two of the Company’s directors, Moishe Gubin and Michael Blisko. Under the master lease, (i) the tenants are paying annual first year rent of $9.5 million, on a triple net basis (ii) the tenants have three options to extend the lease. The first option is for three years, the two remaining options are for five years each, and (iii) the tenants have an option to buy the properties after six years for $127 million. 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 and assisted living facilities.

 

The 24 Facilities are comprised of nineteen skilled nursing facilities with 1,659 licensed beds and five assisted living facilities with 193 beds, of which 29 beds are licensed.

 

The material terms of the Purchase Agreement include: (i) a deposit of $4.0 million made at the signing of the Purchase Agreement, which is non-refundable except as otherwise specifically provided in the Purchase Agreement; (ii) as a condition precedent to Sellers’ obligation to close, the Company’s performance of and satisfaction of covenants and representations and warranties as detailed in the Purchase Agreement; (iii) as the Company’s sole and exclusive remedy in the event of Sellers’ material breach of failure to perform any of its covenants under the Purchase Agreement, the Company’s right to either file an action for specific performance of Sellers’ obligation to perform under the Purchase Agreement or to declare the Purchase Agreement terminated and have the deposit returned to the Company, as liquidated damages; (iv) as Sellers’ sole and exclusive remedy in the event of the Company’s material breach or failure to perform any of its covenants under the Purchase Agreement, Sellers’ right to terminate the Purchase Agreement in its entirety and retain the deposit as liquidated damages; and (v) the Company’s agreement that the Facilities are being purchased “as-is”, except for the limited representations and covenants of the Sellers under the Purchase Agreement.

 

The Company anticipates closing the acquisition in August 2023; however, we can give no assurance that the closing will occur within this timeframe, or at all. The potential acquisition of these Facilities is subject to substantial conditions to closing.

 

The unaudited pro forma condensed consolidated balance sheet as of June 30, 2023 is presented as if the acquisition was completed on June 30, 2023. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2022, and for the six months ended June 30, 2023 are presented as if the acquisition was completed on November 1, 2022.

 

The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2022 only includes the operating results of the WC-Indiana Properties Group for the period from November 1, 2022 through December 31, 2022. The operating results of the WC-Indiana Properties Group for the period from January 1, 2022 to October 31, 2022, were excluded because the Facilities were leased to unaffiliated tenants on substantially different terms during this period, including significantly higher rent for the first six months of 2022 and no rent for the period from June 1, 2022 through October 31, 2022.

 

The following unaudited pro forma condensed consolidated financial information has been prepared to comply with Article 11 of Regulation S-X, as promulgated by the SEC. The unaudited pro forma condensed consolidated 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 six months ended June 30, 2023, and the fiscal year ended December 31, 2022, and the combined statements of revenues and certain expenses for two month period ended December 31, 2022 and six month period ended June 30, 2023 of WC-Indiana Properties Group. The unaudited pro forma balance sheet and statement of operations 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.

 

F-1

 

 

Unaudited Pro Forma Condensed Combined Balance Sheet

As of June 30, 2023

(In thousands)

 

		Strawberry Fields REIT Inc.				Indiana Property Acquisition				Proforma Combined
Assets
Real estate investments, net		$	430,030				102,000		(a)		532,030
Cash and cash equivalents			37,600				(24,386	)	(b)		13,214
Restricted cash and equivalents			29,500				-				29,500
Straight-line rent receivable, net			24,321				-				24,321
Right of use lease asset			1,675				-				1,675
Goodwill, other intangible assets and lease rights			10,118				-				10,118
Deferred financing expenses			5,650				1,076		(c)		6,726
Notes receivable, net			17,809				6,500		(d)		24,309
Other assets			950				-				950
Total Assets		$	557,653				85,190				642,843
Liabilities
Accounts payable and accrued liabilities		$	14,666				-				14,666
Bonds, net			102,744				19,190		(e)		121,934
Notes payable and other debt			375,840				66,000		(f)		441,840
Operating lease liability			1,675				-				1,675
Other liabilities			10,636				-				10,636
Total Liabilities		$	505,561				85,190				590,751
Equity
Additional paid in capital			5,792				-				5,792
Accumulated other comprehensive income			905				-				905
Retained earnings			1,401				-				1,401
Total Stockholders’ Equity		$	8,098				-				8,098
Non-controlling interest		$	43,994								43,994
Total Equity		$	52,092				-				52,092
Total Liabilities and Equity		$	557,653				85,190				642,843

 

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

 

F-2

 

 

Unaudited Pro Forma Condensed Combined Statements of Income

FOR THE YEAR ENDED DECEMBER 31, 2022

 

		Strawberry Fields REIT Inc.				WC-Indiana Properties Group				Proforma Adjustments				Proforma Combined
Revenues
Rental revenues		$	92,543				2,189		(g)		72		(h)		94,804
Expenses:
Depreciation		$	25,530				-				1,051		(i)		26,581
Amortization			3,028				-				-				3,028
General and administrative expenses			6,012				-				-				6,012
Property taxes			13,131				78				72		(h)		13,281
Facility rent expenses			532				-				-				532
Provision for credit losses			(5,636	)			-				-				(5,636	)
Total expenses		$	42,597				78				1,123				43,798
Income from operations			49,946				2,111				(1,051	)			51,006
Interest expense, net		$	(20,507	)			-				(1,226	)	(e)(f)		(21,733	)
Amortization of deferred financing costs			(504	)			-				(49	)	(c)		(553	)
Mortgage insurance premium			(1,704	)			-				-				(1,704	)
Total interest expense		$	(22,715	)			-				(1,275	)			(23,990	)
Other income (loss):
Other income			120				-				-				120
Foreign currency transaction loss			(10,932	)			-				-				(10,932	)
Total other income (loss)			(10,812	)			-				-				(10,812	)
Net income		$	16,419				2,111				(2,326	)			16,204

 

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

 

F-3

 

 

Unaudited Pro Forma Condensed Combined Statements of Income

FOR THE SIX MONTHS ENDED JUNE 30, 2023

 

		Strawberry Fields REIT Inc.				WC-Indiana Properties Group				Proforma Adjustments				Proforma Combined
Revenues
Rental revenues		$	48,554				6,725		(g)		59		(h)		55,338
Expenses:
Depreciation		$	12,461				-				3,154		(i)		15,615
Amortization			1,514				-				-				1,514
Loss on real estate investment impairment			2,451				-				-				2,451
General and administrative expenses			2,413				-				-				2,413
Property taxes			7,435				391				59		(h)		7,885
Facility rent expenses			272				-				-				272
Total expenses		$	26,546				391				3,213				30,150
Income from operations			22,008				6,334				(3,154	)			25,188
Interest expense, net		$	(10,118	)			-				(3,678	)	(e)(f)		(13,796	)
Amortization of deferred financing costs			(253	)			-				(146	)	(c)		(399	)
Mortgage insurance premium			(833	)			-				-				(833	)
Total interest expense		$	(11,204	)			-				(3,824	)			(15,028	)
Other expense			(983	)			-				-				(983	)
Net income		$	9,821				6,334				(6,978	)			9,177

 

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

 

F-4

 

 

Notes to Unaudited Pro Forma Condensed Combined Financial Information

 

1.	Basis of Presentation

 

On June 8, 2023, Strawberry Fields REIT Inc. (the “Company’) entered into a Purchase Agreement, with multiple sellers with respect to the purchase of 24 healthcare facilities located in Indiana (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 WC-Indiana Properties 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		$	4,667
Building and building improvements			79,778
Furniture, fixtures and equipment			17,555
Total purchase price		$	102,000

 

3.	Pro Forma Adjustments

 

	(a)	Represents the adjustment to record the assets to be purchased in the planned 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 a portion of the purchase price for the Facilities at closing, to fund the $6,500,000 loan to the sellers and to pay related debt issuance costs.
	(c)	Represents debt issuance costs of $1,076,000 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 $6,500,000 loan to be made to the sellers, which will be due and payable 60 days after the closing.
	(e)	Represents Series D bonds issued to finance the acquisition. The Series D bonds bear interest at a the rate 9.1% per annum and mature in June 2026.
	(f)	Represents the planned 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 3.5% and mature in 5 years from the date of the loans. For purposes of the pro forma statements of operations, the interest rate is assumed to be 8.67%, which is equal to SOFR plus the 3.5% margin on June 30, 2023.
	(g)	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.
	(h)	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.
	(i)	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

 

F-5

 

Cover	Aug. 28, 2023
Cover [Abstract]
Document Type	8-K/A
Amendment Flag	true
Amendment Description	This Amendment No. 1 on Form 8-K/A (this “Amendment No. 1”) 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 August 28, 2023. As previously reported in the Initial Form 8-K, on August 25, 2023, the Company completed its acquisition of 24 healthcare facilities located in Indiana (the “WC-Indiana Acquisition”). 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 No. 1 to amend the Initial Form 8-K in order to include the required financial statements and pro forma financial information that were previously omitted.
Document Period End Date	Aug. 28, 2023
Entity File Number	000-56451
Entity Registrant Name	Strawberry Fields REIT, Inc.
Entity Central Index Key	0001782430
Entity Tax Identification Number	84-2336054
Entity Incorporation, State or Country Code	MD
Entity Address, Address Line One	6101 Nimtz Parkway
Entity Address, City or Town	South Bend
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	46628
City Area Code	(574)
Local Phone Number	807-0800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, $0.00001 par value
Trading Symbol	STRW
Security Exchange Name	NYSE
Entity Emerging Growth Company	true
Elected Not To Use the Extended Transition Period	false

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