When It’s Not Just the Cap Rate You Should Be Worried About

Everyone likes to talk about cap rates. That’s usually the first number thrown around in a deal conversation. But in medical real estate, the real risk often hides somewhere else.

Take a recent deal we reviewed—new construction, great tenant, long lease, 6.15 cap. Looked clean on the surface. But the tenant’s business model was razor-thin, with regional exposure to outdated Medicaid reimbursement schedules. The lease might be strong on paper, but the operator wasn’t.

That’s the kind of thing you miss without real market intelligence. Knowing the market rent isn’t enough. You need to understand tenant risk, reimbursement trends, sale-leaseback history, and the health of the service line. You need to ask who else looked at the deal and walked away.

This is where most deals live or die—and it’s the difference between transactional underwriting and true diligence. Market intelligence gives you the full picture before you commit.

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