Strawberry Fields Pays the Bill Its CEO Said Would 'Kill Me Personally'
A $24.6 million shekel loss, an exit from Israel, and an entire year's acquisition budget crammed into seven weeks
STRW · Earnings Call · 2026-11-06
The bill he said he'd never pay
For two straight quarters, Moishe Gubin treated Strawberry Fields REIT's three shekel-denominated bond series as a currency position to be rolled, not settled. On the August call he was explicit about why: realizing the accumulated other-comprehensive-income loss would be intolerable.
So to not take that true loss, which I can't stand that if I did, that would kill me personally... most likely our move is we end up taking shekel and then we have 4 years for the dollar to bounce back, which we expect to occur. And that's a bunch of money in OCI that's going to turn around in our favor.
In Q3 he took it anyway. The company booked a $24.6 million foreign currency transaction loss on redemption of the three series, producing a reported net loss of $14.8 million for the quarter compared with net income of $24.5 million... no, of $9.8 million on an adjusted basis a year earlier, up 11%. Year-to-date net income fell to $3.7 million from $24.5 million; ex the item it would have been $28.3 million. The accounting mechanics are genuinely benign — OCI moved above the line, book equity barely budged — but the *decision* was a reversal of a stated red line, and Gubin knew it, devoting the first three minutes of prepared remarks to pre-empting the question.
His defense is arithmetic: the Israeli market priced the refinancing around 8.5% while the U.S. bank market gave them five-year money at SOFR plus 2.75, roughly 6.66%, against a blended interest rate now of 5.8%. “So we basically saved the 2 points on the interest expense and had to then realize this currency loss, which was already in our retained earnings.” — Moishe Gubin, Chairman and CEO · 2026-11-06 Twenty-four million amortized over five years, he argues, is under 1% a year — "we end up ahead of the game."
Exit Israel
What he did not emphasize is that this looks like the end of the relationship that has funded the company since inception, and that he feels mistreated by it. “When this thing renews most likely, we probably just pay it off and move towards an exit of the Israeli market.” — Moishe Gubin, Chairman and CEO · 2026-11-06 He went further: "I'm stronger than everybody else, we should have gotten treated a little bit better." For a company whose 2025 and 2026 calls returned again and again to Israeli bond debt as its flexible, three-day-draw private placement machine, that is a real structural change, not a footnote.
The cost shows up where it always does. Interest expense has more than doubled over four years to $13 million a quarter, and interest coverage sits at 1.7x, well below the 2.4x it managed in 2022. Liabilities are 94.2% of assets, up nearly five points year over year, and the next deal requires taking on $43 million of debt because a state reimbursement formula demands 53% leverage on the assets.
A full year of acquisitions in seven weeks
The acquisition story has now slipped three quarters running. In February, Gubin hoped Q3 would close "somewhere in the $90 million to $100 million range." In August, Jeff Bajtner said “I think realistically, we could have about $130 million of real estate at least closed towards year-end.” — Jeffrey Bajtner, Chief Investment Officer · 2026-08-07 The only acquisition the Q3 call actually identifies as closed in 2026 is the $10.4 million Kansas City hospital campus on September 9. Everything else — Angola, Indiana at $15 million; a Florida sale leaseback; an unannounced Midwest state — is now hoped for in the final seven weeks. “Our pipeline currently has $400 million of deals, of which we anticipate closing $123 million of these deals before year-end.” — Jeffrey Bajtner, Chief Investment Officer · 2026-11-06 Add the $10.4 million already done and you get "over $130 million" — which is precisely how the year's guidance is being met: $10 million closed through three quarters, $123 million in the fourth.
Funding that sprint depends on a tenant exercising a purchase option in Arkansas, and on “one last letter to come in from the government” — Moishe Gubin, Chairman and CEO · 2026-11-06 that has already been two weeks late. That matters because Strawberry has spent years insisting it never sells and never grants options — "We're usually never a seller. We don't give options to anybody," Gubin said in May 2025. Now: “That transaction was it's an option that we gave the tenant, and we usually don't give options... We have one other option out there.” — Moishe Gubin, Chairman and CEO · 2026-11-06 A $90 million sale price, $6 million of debt, $83 million of net cash and roughly $60 million of gain, recycled through a 1031 into the new purchases. The landlord is becoming a trader, quietly.
What the market is being asked to believe
The bull case rests almost entirely on a cap rate argument. Management marks its own portfolio to a 10% cap and reports net debt at 48% of net assets; re-mark at 8.75% — the level "CareTrust and the other guys" are reportedly transacting at — and net assets rise from $1.467 billion to $1.673 billion and leverage falls to 42%. "Our closest peer is trading almost double, which is painful for us every time I see this."
Two things complicate the pitch. First, the dividend is being held flat at $0.17 for the fourth quarter — a 5.3% yield and a 50.2% AFFO payout — after years in which Gubin promised annual raises: “We know that we're going to have at least one raise of a dividend a year, at least that's what we expect.” — Moishe Gubin, Chairman and CEO · 2025-11-07 Second, he refuses to issue equity at this price, which is understandable and also the reason growth must be debt-funded and back-end loaded. The stock closed around $12.60, down 12% in ninety days and 17% from its July 27 peak of $14.62 — so the AFFO per share growth of ~10% the company keeps citing is being delivered while the multiple gets no benefit of the doubt.
Underneath it all sits the same durable asset base: 145 facilities, 15,655 licensed beds, 100% rent collection, 2.24x rent coverage and a skilled nursing portfolio that is 6.8 years weighted-average leased. FFO reached $19 million in the latest reported quarter, up 76% over four years. The operating story is intact; the financing story just got more expensive and less flexible.
Gubin's closing riff on politics was the most candid thing on the call — red states cut your rates, blue states raise them and audit you harder, and Susan Collins losing in Maine is read as a win for good care operators. "The person who gives good care is going to be fine." Maybe. But the person who gives good care and just realized a $24.6 million loss to escape a bond market is being asked to prove something else entirely: that a $400 million pipeline and a 9.5x multiple eventually close the gap. The next seven weeks decide whether this quarter's headline was a one-time charge or the first honest admission of a slower growth model.