Good morning. My name is Matthew, and I'll be your conference operator today. I'd like to welcome everyone to the Strawberry Fields REIT's second quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I would now like to turn the conference over to Jeffrey Bajtner.
Thank you, welcome to Strawberry Fields REIT's Q2 2025 earnings call. I am the Chief Investment Officer, joining me today on the call are Moishe Gubin, our Chairman and CEO, and Greg Flamion, our CFO. Earlier today, the company issued its Q2 2025 earnings results, which are available on the company's investor relations website. Participants should be aware that this call is being recorded, listeners are advised that any forward-looking statements made on today's call are based on management's current expectations, assumptions, and beliefs about Strawberry Fields REIT's business and the environment in which it operates. These statements may include projections regarding future financial performance, dividends, acquisitions, investments, returns, financings, and may or may not reference other matters affecting the company's business for the businesses of its tenants, including factors that are beyond its control. Additionally, references will be made during this call to non-GAAP financial results.
Investors are encouraged to review these non-GAAP financial measures as well as the explanation and reconciliation of these measures to the comparable GAAP results included on the non-GAAP measure reconciliation page in our investor presentation. Now on to discussing Strawberry Fields REIT and our Q2 2025 performance. I wanted to start by sharing some key highlights. During the quarter, the company collected 100% of its contractual rent. On April 4th, the company completed the acquisition for a skilled nursing facility with 112 licensed beds near Houston, Texas. The acquisition was for $11.5 million the company funded the acquisition utilizing cash from the balance sheet. The facility was added to the master lease of an existing third-party operator, the initial annual base rents are $1.3 million and are subject to 3% annual rent increases.
On May 22nd, the company entered into a $59 million purchase agreement for nine skilled nursing facilities located in Missouri. Eight of the facilities will be added to the existing master lease of our tenant, the Tryko Group, the ninth facility will be added to another of our tenant's master leases, Reliant Care Group. Combined, these facilities will have an initial annual base rent of $6.1 million and are subject to 3% annual rent increases. The company closed the acquisition on July 1st, 2025, funded the acquisition utilizing working capital. On June 24th, the company issued ILS 312 million in Series B bonds on the Tel Aviv Stock Exchange, which is approximately $90 million. The bonds are unsecured were issued at par with a fixed interest rate of 6.70%.
Subsequent to this issuance, $30 million was used to pay down existing secured bank debt that had a higher interest rate. By making this paydown, the company will be saving approximately 100 basis points. A couple of other items I wanted to mention. During the quarter, the company continued to pay its quarterly dividend, and on June 30th made a payment of $0.14 a share. For the upcoming quarter, we are excited to announce that the board of directors has approved increasing the dividend to $0.16 a share. This increase represents a 14% increase in the dividend payment and the company continues to maintain its dividend payout ratio below 50%. On the acquisition front, we closed on a couple deals since the quarter end. The first was a $59 million acquisition in Missouri that I mentioned earlier in my remarks.
The second was closed earlier this week for an 80-bed skilled nursing facility near McLoud, Oklahoma. The acquisition was for $4.25 million, which the company funded utilizing cash from the balance sheet. The facility was added to an existing master lease for a tenant of ours in Oklahoma, and the initial base rents are $425,000 and subject to 3% annual rent increases. I would now like to have Greg Flamion, our Chief Financial Officer, discuss the quarter end financials.
Thank you, Jeff, and welcome everyone to the Strawberry Fields REIT's second quarter 2025 earnings call. Let's begin with the financial position for the quarter. Total assets are $897 million, an increase of $261 million or 41.1% compared to Q2 2024. The asset growth was driven by three factors. Our 2024 to 2025 real estate acquisitions, the re-tenanting of the Landmark master lease and the Kentucky master lease, as well as proceeds from our new bond series issued in late June. The additional cash on the balance sheet was used as a source of funds for the Missouri acquisition that closed in July 2025. On the liabilities and equity side, we saw corresponding increases due to the financing used from the acquisitions in foreign currency translation losses in other comprehensive income. As mentioned before, in July, we acquired nine properties in Missouri for $59 million.
This slide shows a pro forma balance sheet detailing the impact of this transaction. The acquisition strengthens our regional footprint and supports our long-term growth strategy. Year-to-date revenue through June was $75.2 million, up $18.1 million compared to the same time frame last year. That's a 31.7% increase that was driven by timing and integration of the 24 properties that we occurred over that time period and the Landmark to Kentucky master lease re-tenanting that began in January 2025. While we experienced higher revenues, the income growth is offset by higher depreciation, amortization, and interest expense, which is driven by new property acquisitions. This results into a year-to-date net income of $15.7 million, or $0.28 per share, compared to $13 million or $0.26 per share in Q2 2024. Our quarterly performance has drivers consistent with those discussed in our full-year results.
Revenue growth increased by $8.6 million due to acquisitions and lease re-tenanting activity. Expenses increased through depreciation, amortization, and interest expense. The quarterly net income is $8.7 million, which represents an EPS of $0.16 per share. This compares to an income of $7 million in 2024, with an EPS of $0.14 per share. Finally, I'd like to end my presentation with some financial highlights. Projected 2025 AFFO is $73.4 million, up 31.5% versus 2024. The projected 2025 AFFO represents a 13.6% 2020 to 2025 compound annual growth rate. Projected adjusted EBITDA is $125.4 million, a 38.4% increase year-over-year. This represents a 13.5% 2020 to 2025 compound annual growth rate. Our net debt to net asset ratio currently sits at 49.1%. As of June 30th, our dividend was $0.14 a share, representing a 5.3% yield.
Our AFFO payout ratio remains at 44.1%, providing our shareholders with a healthy dividend while allowing the company room to make acquisitions. These results reflect disciplined execution to our company strategy and a continued focus on shareholder value. With that, I'll turn it back over to Jeffrey Bajtner, who will walk us through our portfolio highlights.
Thank you, Greg. I would now like to present the portfolio highlights of our collective portfolio. These numbers include the recent acquisitions in Missouri at the beginning of July and also the acquisition that we closed earlier this week in Oklahoma. The company now has 141 total facilities that we own. That is 15,418 beds. Our total asset value at acquisition is $1.1 billion. Currently, we have 16 consultants advising to our operators. Our weighted average lease term is 7.4 years. Our portfolio's EBITDA rent coverage as of May 2025 is 1.98. Our net debt to EBITDA ratio is 5.6. We continue to be proud of our rent collection. That's 100%. As a final point, our acquisition pipeline is currently in excess of $300 million. I would now like to hand over the microphone to Moishe Gubin, our Chairman and CEO, as he continues the presentation.
All right. Thank you, Jeff. Hi, everybody. I get the fun task of doing the peacock, walking around over here, talking how good we're doing. As you see on page six, you can see how our projected 2025 AFFO is over $73 million. I previously predicted $75 million. We might still hit that. In the meantime, our projection today is $73.4 million. Our projected 2025 versus 2024 AFFO growth is over 31%. Our growth rate from the last five years being a 13.6% growth rate. Our projected 2025 EBITDA, I don't really look at this number, but it's $125 million. That's also growing at a nice clip, year-over-year, 38%, and over the last five years, also 13.5% growth. Our net debts and net assets, super proud, less than 50%. That's after raising debt. Our stock price is still in the dumps and such.
We weren't selling equity during the second quarter, to fund our growth that we needed to do, we took on debt, we brought our net debts and net assets to be still below 50%. Our dividend yield as of June 30th was 5%. As Jeff said earlier, the board of directors today, or yesterday, approved a dividend increase from $0.14 to $0.16, which puts our dividend yield, I think, at today's price, about 6.4% or so. Our projected AFFO payout ratio is still under 50%, which comparatively to our peers, is better than everybody. Okay. On slide seven, you see our beautiful graph that from 2020 to 2025, like I said earlier, just two minutes ago, was a 13.6% growth rate, close to $39 million to $73 million. That's really a testament to how we buy everything.
As you all know, our disciplined investor approach has us earning a 10% cash-on-cash unlevered return on day one, that should continue. We don't plan on changing how we buy and what we buy. Next slide. This slide, just similar in the growth rate, like the AFFO, our base rent, we're projecting to hit for 2025, over $135 million top-line rent. Super proud of that. Need to keep growing, obviously, to catch up to our peers. Next slide.
This unfortunately is our stock price. It's part of our slides because God willing, in future quarters, we're going to be able to do a victory lap as we hopefully start hitting new highs. Our year high, I think is $12.90, right now we're somewhere near a low for the year for absolutely no reason. Our returns are better. We continue to be able to make good investments with no bad debt. On slide 10, like I was just saying about our stock price. On one side, unfortunately, our one-year total return versus our peers, we've become the bottom. In our AFFO trading multiples, you see we're being traded a lot lower than our peers.
I'm hoping at some point the investment public realizes what a deal our stock is and our stock starts trading closer, at least to the next tier of LTC, Omega, and Sabra, to be the mid 12 times, which should put our stock price probably somewhere around $14, $15 a share. Next slide. In slide 11, you see our payout ratio. We're the lowest comparatively to our peers at 44%. Even once we increase the dividend, I think we still stay below 50%, so we have two times coverage of our dividend. Our dividend yield at 5.3% is at the low end, but like I said, once we increase the dividend for payable in the third quarter, but for the second quarter, we'll be closer to 6.4%, that's hopefully before the stock hopefully moves a little higher. Next slide.
As we've talked about in previous quarters, we are the closest pure play SNF real estate investment trust out there. Over 91% of our portfolio is skilled nursing facilities. What used to be the most similar peer to us was CareTrust, and now they are at 50.9%. There's nobody even close to us. We believe that the nursing home market, the SNF world, is a great area for us to be in. We have expertise which mitigates risk for tenants going bad, which we haven't had. It's one of the only businesses that most of our tenants' revenue stream comes from the government, which is protected. Medicaid, they're not doing anything to the Medicaid program, even though there was a scare most recently. That didn't play out to be anything important.
Again, we always tell people how our business is a need-based business as opposed to a lot of the other REITs are want-based business. If mom needs to be in a nursing home, you put mom in a nursing home. In a want-based business, you have assisted living. If you can't sell your house, you don't move into assisted living or retail or all the other kinds of REITs. Maybe with the exceptions of the REITs for prisons and all that or post offices. For the most part, most REITs are wants, retail, multifamily. In this case, we're a need, and we think we're where we're supposed to be with my background and my management team's background being in the nursing home space previously. It provides a good support for our company for if there's any issues needed, strength and support from us. Next slide.
Just comparatively to our peers. Again, this is going to become not a good data set because as they move away from SNFs and they are who they are, this should change. In the meantime, our EBITDARM coverage is close to 2. That continues to improve. Most recently, all of our Missouri portfolio, July 1, got a major increase to the rates. Tennessee, same thing as expected. I'm not sure a couple of the other states, we should see an increase in the EBITDARM coverage ratio, and we're right in the middle of the pack. As far as the AFFO share growth, I think that's the big difference. An investor that's out there that's just looking at dividends and they're not looking at the total return, they may not realize how great of an investment this is.
When you take a look at our AFFO share growth compared to the peers, we're at an 11% growth rate, where most of the others are at a negative growth. We take that 11 and one growth on an AFFO per share and add it to the dividend yield, we're talking about a 16%-17% return for the average investor buying our stock today, and that's without the upside of the stock being traded at such a low value. We feel that's a very attractive stock to own. Next slide. This is one of my favorite slides, where we talked already about the payout ratio, and we just talked about the AFFO share growth. This just puts it to you, showing you the growth over the last five years. Just year-over-year from 111 to 127.
$0.60 on 111 is close to 14% for the year. It's positive, and we're really proud of our company. Next slide. On slide 15, we're kind of aging out of this slide as well. Our company today, we're morphing into similar territory as our peers. Still at a 50% debt, like we talked about before, and our target range of 45%-55%. If you look at this chart, you see how the bonds have taken over as being our largest source of debt. I love the Israeli market. The Israeli market seems to love us in return. We just did a successful bond raise in the second quarter that we were oversubscribed by almost three times. Because the dollar was so weak, we took more money so that we could pay down American debt that was in dollar denomination.
We recognized its unrealized capital gain on the currency exchange because we were able to pay off at a very good exchange rate, which once everything settles in three years or whatever it is, we should recognize north of a $10 million currency exchange benefit. I know in this quarter, because of the dollar becoming weak or weaker on our balance sheet, you'll notice a decrease in equity, which is based off of the recognized loss on currency. In reality, we're way in the money, and I expect all of that to go away and turn positive and actually we'll realize net income from the currency at some point. That being said, HUD is 34%-35%, and the banks are minimum and getting smaller. We do have expectation.
I know last quarter one of the analysts asked, I've answered, and we're on target to do exactly what I said earlier, which is we're going to refinance Bond C, D, and A in the next 12 months. Whatever the marketplace can absorb in Israel, because of size, we're going to do staggered maturities so that we don't have, in the future, maturity date of too much in one time. Whatever we don't do in the Israeli market, we will do in a conventional unsecured credit line with one of the banks. Hopefully by the end of 2026, we should be at a nice spot between HUD bonds and banks. Similar to where we're at, maybe a third, a third, a third. I'd like to get the HUD debt to be a little higher.
In the meantime, we're still in the same range of a third, a third, a third, with the banks being the low end of that 22% and the bonds being the high end at 43%. Next slide. Slide 16 has become my favorite slide. If you look at it, we've diversified our portfolio by state and by consultants, by rent. Today, with the anomaly of Indiana being 25%, which is one tenant and I think two master leases. Outside of them, everybody else is below 18% as a percentage and as a group. We're going to continue to diversify, and we're going to continue to keep growing the wedge here that's other and the wedge there is Missouri. We're not growing Illinois. We're not growing Kentucky at this point. Tennessee, God willing, Indiana, God willing, and new states, God willing as well.
This is really nice. Like we've talked about before, when we started this 10 years ago, 11 years ago, in the form that it is now, we were two states with one operator, now we're a lot more states with, I think altogether we're at 16 master leases and thank God it's gone very well. Last slide that I'm presenting is 17. That just shows you the map. We're growing. 141 properties. It's exciting times for us. With that, I believe I'm handing it back to Jeff.
Thank you, Moishe. This marks the end of the company's prepared remarks. I would now like to hand it back to the operator who will be presenting questions to us from our analysts. Thank you so much.
Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. If you're listening through webcast and would like to ask a question, please click on the Ask Question box on the left of your screen. Type your question and hit Submit. Please hold while we poll for questions. Your first question is coming from Barry Oxford from Colliers Securities. Your line is live.
Great, guys. Thanks for taking my question. Moishe, when you look at your tenant base, I know you collected 100% of the rents, do you have a tenant or two that you might have on a watch list currently, or is the health of your tenants all pretty strong at this particular juncture?
That's a good question, Barry. Good morning. Good to see you. Or good to hear you. I would say that if there's any weakness in our portfolio, it's not facility or operator, it's more state. Right now, state of Illinois, which used to be our biggest part of our portfolio, now it's smaller, thankfully. Illinois still is the laggard. That has to do with reimbursement and staffing still, which is like an old topic, but no one really talks about anymore, which thankfully because ad nauseam, I'm going to defend it. They're still paying the rent, and they have a coverage over one, but that's still our struggling space today. We're re-tenanting a few of those properties at some rent than what we're getting now. It'll increase our wallet by a drop because we'll lease that into 10 years.
We don't really have anyone that's really struggling, that's more of a watch than what we do to begin with. Let me just give you an idea for our way of asset managing. The asset managers are typically keeping an eye on surveys. We have a nurse consultant that's reviewing surveys from all of our tenants' facilities. We're constantly monitoring what's going on there, and then we're in touch with the operators when there's a problem. Then we push to get results, and if we have to even offer help with our nurse consultant helping them, it hasn't happened, but we offer. We're keeping an eye on survey stuff. As far as financial spreads, we're doing that on a regular monthly basis when we get the data. Everyone's watched the same way.
I guess the real eye today is the push from the associations in Illinois to push for the reimbursement to improve. It's just the perfect storm. It's price-based reimbursement, so you have to live within a budget, and then they put pressure on operators with union contracts and other things, which I'm pro-union, have to be, but regardless, the unions over there have gotten a higher base wage than everywhere else in our portfolio, and so the reimbursement has to catch up to it. I think that answers your question. We're watching what's going on. We don't have anything major danger, but we have stuff that our eye is on, and I'm not too worried. Things will work out, God willing.
Right. You touched on reimbursements, and you touched on the expenses, but is there some overriding concerns about Medicaid and how much they're going to bump?
Again, the Medicaid program is administered basically in two ways. It's either price-based or cost-based. To be specific to our portfolio, really, Illinois is the only price-based state. From that point of view, Illinois has historically always taken care of elderly and Medicaid program, and there's no real pressure on them. There's no pressure, of course, to cut anything, but the pressure is for them to keep up when there's rising costs. Historically, Illinois was always a little slower on the uptick. I would expect, rates have gone up, don't get me wrong. When I first started this business, I think we have one of our buildings that are here that I was part of the operations. We were getting $90 a day or $94 a day as a Medicaid rate.
I think today our average Medicaid rates are between $250 and $300, and that's 20 years later. I don't know what that equals if somebody could figure out the math, but I think that's a pretty good clip as far as increased costs and increased revenue. I'm not too worried. At the end of the day, the reimbursement, the legislature, based on price-based reimbursement, the only way it works is the state legislators have to go down to Springfield, and then they have to allocate more resources. Their constituents and their districts are all pushing, and we're pushing as an association. Any chance we get to talk to the politicians, because they're the only ones that can do it. It's not an act of Congress, it's an act of state legislature. I'm certain everything will work out.
It's a blue state, and the blue states always are better for caring for people as far as finding the money to fund these things. I'm not too worried. You brought the question up, so I gave you an answer. Reality is I'm not losing any sleep over this.
Right. Last one from me, switching gears. You have a decent acquisition pipeline right now. Given where your stock price is, how do you think about your cost of capital, and how do you think about financing future acquisitions without getting too far out on the debt metrics?
Yeah. That's probably the most popular question I get when I talk to investors. It really is because there's The parameters that you want to stay within, that you don't want to upset the average investor that's looking for us to be within a certain range on things. If all things were equal and I had nothing to worry about, and I knew that there was a brand of investors out there that would support my stock because our returns are going to be better than the next guy, then I would push our debt level higher. Our range is 45%-55%, but my background in real estate, there was times where I was 80% levered in my portfolio 20 years ago. We haven't been near there in many, many years.
I guess push comes to shove, some point down the road, if the leverage really got to a point that it was like at 55% and we had a sweet deal, I'd probably end up selling equity cheap or take a mix of equity and debt, because I really want to respect the investor marketplace. I work for the shareholders regardless, the investor marketplace is make or break in the long run of our company stock and how we're looked at by you guys, the analysts, and by the investors themselves. I don't want to lose that trust, and I don't want to lose the faith that they might have of us doing things responsibly and in a normal range. Today, we don't got to worry about it.
50% leverage, which gives us an ability, just even if we got to our own 55% internal limit, gives us enough room to add a bunch of debt if we needed to. All of our banks and all of our lending has us to 65% leverage, which we're never going to get to. I can't see myself ever really doing that, because that's like hitting the rip cord that half the people that want to own our stock a certain way would have to dump our stock because we would get out of the parameters that most people are comfortable with, and I don't want to do that. I think that answers your question. This is a better question to ask if we end up finding a deal for $200 million-$300 million and the stock is still trading at $11, which is terrible.
If that would happen and then you say to me, "Moishe, what are you going to do?" I'm going to tell you, "Barry, I'm going to make it work, we'll probably end up taking equity," we shouldn't, I think that's the move to make sure that everybody stays happy with us.
Perfect. Appreciate the commentary, guys.
You're welcome. It's good to hear your voice.
Yes. Thank you.
Thank you. Your next question is coming from Kyle Katorincek from Janney. Your line is live.
Hey, good afternoon, guys. Just piggyback on Barry's question. Just trying to get an impact of potential reduction in provider taxes at the state level and the way that Medicare is or Medicaid is financed.
Kyle, how are you? It's good to hear your voice as well. That's a good question. Really, our portfolio, we're only really affected, I believe, in Indiana. Indiana, I think, maxed out on the IGT, or UPL, depending on how you want to call it, and the federal matching. Federal matching as it pertains to the program that they're referring to. Indiana happens to be our strongest state. We have coverages over two. Tenant does real well. The relationships with the hospitals there are really strong. There's a lot of upside still. They're actually our weakest census state, though I've told the investor public over the years, previous meetings, how our tenants are an efficiency business, not an occupancy business like a lot of other REITs.
Because most of the expenses on our tenants are variable, and minimally fixed, whereas the other REITs are mainly fixed and minimally variable. That being said, there's so much room for that tenant to increase bottom line, even though they're really our best performing state financially. There's so much room for them, and they'd be able to absorb. I don't know if I want this on the record if some politician hears this and says, "Moishe said that they could absorb a cut." The reality is that's really our effect in our portfolio. Now, that doesn't mean that we don't buy into a state and a new state with a new portfolio that can be affected by something over here.
You keep in mind that the starting point. These are good talking points by politicians, the reality is that most of these programs were created for states that have rural communities that I don't know. I don't know. Did I lose people or did I-
You're still there.
I can still hear you.
Oh, I'm sorry. Yeah, my screen went blank, and I thought maybe I lost power or something. Like I was saying, if you needed to go to a hospital, they didn't want you driving a half an hour, 45 minutes, or an hour to somewhere else. Same with the nursing home. They didn't want you, if your mom is in a nursing home, that you have to schlep an hour each way to a nursing home somewhere else. They wanted a nursing home per county, it wouldn't be too far.
Even though the politicians have good talking points and this is a good topic to talk about, the reality is that the underlying point that they want to accomplish is they want to have healthcare local to where people are, and they want to meet the needs. States like Indiana, which is why they're using the most of it. You have counties with 5,000 people in them, like Jasper County or Roselawn or other counties, Newton County. These are counties that have not even 50,000 people, maybe 20,000 people, and they want them to have a nursing home nearby that they don't have to schlep far away. Again, I don't think in the grand scheme of things, these kind of changes are really going to happen.
I think the changes that the government want, that we'll end up doing, and rightfully, is make sure that the people that are supposed to be on Medicaid are the ones that are on Medicaid. It wasn't meant for illegal aliens. It wasn't meant for a bunch of other people that are on it. I remember when I first started in this business, you had to prove that you're a citizen, and even that you had to prove that you were sick, and you had to get some kind of assessment or pre-admission screening that really proved out, if you were under 65, that you were eligible and deserving. Now it became so loose that you have all kinds of people that can get on there. Kyle, I don't know if I answered your question. I think I did.
I believe at the end of the day, a lot of this stuff, which is healthy discussion, but in reality, unless they really want to go to a point where people really can't visit mom and be so far away, I can't really see them really destroying it terrible. If there is a little bit of a cut, the one place that can take the cut is the place that would get the cut. I think that's the answer.
Okay. Thank you for that. Appreciate it. Then one last one from me. You mentioned Tennessee and one other state had major increases to rates. How much did they increase over prior rates?
Well, I don't know offhand. I saw it. It was a good number. Missouri had the biggest increase that I saw. They had just gotten another increase before. I think January rates went up big. I think July they went up another easily 10%. I saw rates for some of our tenants that were going up $30, $40 a day, which, is easily a 10%-15% increase. If you need more data.
I also.
We could find something. You could just email Jeff or myself, and we could find you a response.
Thanks, Moishe. Appreciate it.
No, I was laughing.
Thank you. Your next question is coming from Gaurav Mehta from Alliance Global Partners. Your line is live.
Yeah, thank you. Good afternoon. I wanted to go back to your comments around acquisition pipeline of more than $300 million. Can you provide a breakdown of what's in the pipeline? Are you looking at any portfolios or are they single assets? Then, maybe a breakdown by which markets you're looking at.
All right. Jeff, you want to answer that?
Yeah. Currently, we've got one deal we closed earlier this week. We have another small deal that we're working on in Missouri that we've got papered up and should be closing. Otherwise, we're looking at, by and large, this $300 million is comprised of predominantly in states that we're currently in. Some of them are bigger portfolios. One of them is over $100 million. The deals keep on coming in to us. As we've said before, Moishe's been in this industry a long time. We've been going to these healthcare conferences, probably three, four times a year. Everybody knows who we are, and there's a lot of interest in us. The deals keep on. People keep on coming to us, seeing what we could do if we want to go to a new state. We're only going to go to a new state if it makes sense.
We're going to go to a new state if it's a sizable portfolio, similar to what we did last year in Missouri and Kansas earlier this year. Once we get a master lease in a new state, we'll grow that as well. The $300 million really is right now, as I said earlier, we've got one more deal to close, and we're just reviewing a fair amount of deals, and hopefully we'll be able to get a few more done before year-end.
Yeah, I think, Gaurav, just to add to Jeff. We would look at most states. There's a couple of states that are off that we don't ever want to go to. There are other states that if the tenant is strong enough, the guarantee is good, their financials are good, then we'll entertain it. One of those marginal states that typically we weren't so excited about, but for the right situation or the right tenant and all that, would be a state like Connecticut or a state like Wisconsin. Right now, we don't have anything else in our pipeline that's others that are outside of our current territories other than looking at a few deals of like I just said is maybe Connecticut, Wisconsin, or the like.
Okay. Second question I had was on the rent coverage. It seems like it moved up a little bit to 1.98 from 1.89 times last quarter. Can you maybe talk about how we should expect the rent coverage ratio going forward?
I talked about that before. The thing is when we start brand new leases, every brand new lease we bring in is at a 1.25. It kind of makes us take a step back when we're looking at the overall rent coverage, as a metric. Everything we have is improving. Everything is stable and improving, getting better than stable, or thriving, stable or thriving. Depending on the deals that we do, if you dilute the pool and we do $150 million, and we put that all in 1.25, and the rest of the portfolio that we're showing the number as a metric is, I don't know what number we're using for that, maybe $800 million or $1 billion something, where it's still diluted by 10%.
If we did no deals next year, that number would go way over to probably, with the increases to the rates now, probably be $225 or $250. If we do like we've done, I think, about $140 million in the last 12 months. You figure we keep running at that clip, that growth goes from $198 to maybe $215 or something, $220. It's going to keep improving because everything we have is improving, and we're still looking towards the baby boomers and all that. What do we call that, the silver tsunami, whatever it is.
Silver tsunami.
Yeah. We're still waiting for that to happen. That hasn't even affected our portfolio yet. That's going to happen in the next few years, and that should be incredibly positive for our company and our shareholders.
I would add to Moishe's point there, specifically, as you mentioned to the previous question from Kyle. Tennessee is a long-term state that we've been in. They got a sizable increase a couple of years ago, but July 1st this year, they got another very good increase, so that's going to start flowing into the rent coverage. Missouri, where we're now up to 17 facilities, we expect that to bring up the overall rent coverage as well.
Okay. Thank you. That's all I have.
Thank you. Have a good weekend.
Thank you. Once again, everyone, if you have any questions or comments, please press star then one on your phone. Your next question is coming from Mark Smith from Lake Street. Your line is live.
Hi, guys. Most of my questions have been answered here. I am just curious about kind of integration of new acquisitions as you guys have been really busy here this year. Any learnings or any hiccups along the way that you guys can improve on?
We have a good war machine here. At the end of the day, to absorb that question would've been good maybe a year ago or a year and a half ago, when we found out that we had some things that harder to absorb, and we created a whole transition checklist. At this point, the way we operate, it's really turnkey, with minimal exposure for things going wrong. Even our worst case scenario is the first month, we collect the rent a little late. We get the rent bills out late. That doesn't happen, but it doesn't affect our cash flow. At the end of the day, we really have a well-ran, and I guess, you can't really believe me because I'm talking about myself, I guess, because it's well-ran.
I would say that we have a well-ran company, and from getting the deal closed, once the deal is closed and absorbing, getting the rent bills out and getting the rent in, and paying the mortgages and the cash flow and running the financial stuff, that all runs real well. Bringing in the asset managers, before we buy the asset and having them already have a baseline of how the facilities are and what to expect, that also helps us in preparation for when we absorb the asset. Remember, we're triple net leases, so it's not like we have to sit there and figure out a whole bunch of CAM calculations or tenant improvements or manage construction budgets. We don't do any of that. We're as simple as we make a deal, all the documents are negotiated way before we close the deal.
Once we close the deal, we already have our first month's rent guaranteed. Usually, the money's already wired in before the deal closes or right when the deal is closing, and we're off to the races, and it's just that. That makes us different from, I guess, from most of the other REITs as well because it's that triple net. We don't have any RIDEA. We don't have any of that, any other wonky stuff. Like, it's just that easy to go and absorb it at this point. The people that have been with us, we've had longevity with the employees, and people know what they're supposed to do, and it's been good. I like that question. Thank you.
Similar to that, just as we think about kind of G&A, are there any additional people that you need to bring in, or do you feel like you've got kind of the whole infrastructure in place here today?
Like I said, I think someone asked that maybe last meeting or the meeting before. Our only real material changes that may occur, I guess material is a defined term. I don't know if any of it's material when you have a balance sheet of a billion something. I don't know if 100,000 here or $200,000 there is material. In regards to our company, we have the officers that we want to have at the top end of the company, which is myself and Jeff and Greg, and we've replaced our Chief Legal Officer to a new General Counsel. We have what we need infrastructurally. I guess from an employee, there's always maybe a need for a little bit of clerical help here and there. Maybe another person, maybe another asset manager as we grow as well. Maybe the fourth asset manager.
I know we're at three. Overall, on the cost side, the only real cost, well, the cost savings when we finally eliminate We have a bond issuance or two bond issuances that force us to have accounting done, and a separate board of directors and everything that costs us between the D&O and everything, it's probably about $1 million a year that we're going to be able to eliminate. If not this calendar year, it'll be in 2026. That'll be to the positive. To the other side, the negative, at some point, I assume compensation committee on our board level will at some point pay me market wage. Right now, I get paid $300,000 a year, I'm not complaining about it.
We're fine, that's probably why they're able to keep pushing it off year in, year out to not give me a raise. That might be an increase, I'm not thinking that that's going to break the bank regardless. That's why we're ran so inexpensively, because I get paid nothing compared to my peers, which is fine. That's really our only other cost. Our office space where we are, we've been there since inception. We don't expect those costs to go up. It's really well-ran, clean. You could look at our financial statements, there's minimal amount of lines on them for someone to be able to analyze and take a look and see how we're operating.
I guess the most confusion that we have for the investor public is our equity stack, how we have the LP units that somehow confuses folks on. Really, I explain that to people as non-voting common. Anyway, I'm on a tangent. I hope that answers your question, Mark.
Yes, absolutely. Thank you.
You're welcome.
Thank you. I will now hand the floor over to Jeff Bajtner for webcast questions.
That does it from our end. There's no further questions. I wanted to thank everyone for joining today. On behalf of myself, Moishe, Greg, and the team, we're very excited and proud of the strong quarter that we produced, and we look forward to continuing to provide stable returns to our shareholders in the future. If anyone would like to reach out to us, the slide on the screen right now shows mine and Moishe's email. Feel free to send us an email and we will get back to you. I wanted to wish everyone a great weekend. Thank you so much.