Where Healthcare Meets Housing

A new generation of operators are boosting returns by marrying Medicaid and real estate

When America’s two largest industries meet, interesting things are bound to happen. And sure enough, some real estate investors unsatisfied with the returns they’re able to achieve through traditional routes—value-add multifamily, industrial, et cetera—have found success at the intersection of healthcare and housing.

Real estate models incorporating healthcare services are nothing new. Many segments of senior housing, for instance, integrate some element of healthcare into their offerings. But today’s letter will focus on two real estate concepts leveraging Medicaid dollars to generate returns—and a successful OpCo-PropCo business—while providing much-needed housing to vulnerable populations.

While the Trump administration’s threatened Medicaid cuts add an air of uncertainty to these models today, the macro trends—an aging population and a growing share of GDP going to healthcare—seem inexorable.

Today’s letter will tackle:

• Trends combining healthcare and housing;

• Medicaid housing models;

• Target returns, structures, and financing models;

• The sector’s outlook in light of federal uncertainty.