Why UnitedHealth Has Been Investing In Affordable Housing

by Trefis Team
UnitedHealth Group
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UnitedHealth Group (NYSE: UNH) has been investing in affordable housing in recent years, and recently invested nearly $18 billion in Michigan for a mixed income housing development. These investments seem odd at first glance, as real estate is not a core competency for the company. However, these investments complement UNH’s Optum business, which includes significant mental health and substance abuse treatment as well as other similar services. Additionally, these investments will also give UNH future tax credits.

Previous Investments

UnitedHealth Group recently announced a nearly $15 million investment in Jefferson Oaks, a mixed-income housing development in Michigan, as well as a $3.7 million investment in another housing development in Michigan that will include units for special needs and/or homeless tenants.

This is not the first time that UNH has invested in an affordable housing project. UNH invested nearly $17 million in two projects in Michigan last year. Earlier this year, UNH also invested nearly $12 million in Los Angeles to serve homeless and low-income individuals and families. So far, the company has invested nearly $350 million in affordable housing since 2011 for 56 housing development projects in 14 states. These projects will create more than 2,700 affordable-housing units. These investments are part of UNH’s initiative to help people live healthier lives by assisting them with affordable housing along with its healthcare services.

Affordable Housing Projects Could Support Optum

United Health’s Minnesota housing project in which it invested nearly $50 million in 2013 has already provided more than 100 housing units to homeless people. UNH has had a reasonable amount of success in these projects, though in many cases it’s still early in the investment period.

There are two major benefits of investing in affordable housing projects for UNH’s strategic and financial point of view. First, as the company continues to increase its focus on the Optum business, which includes mental health and substance abuse treatment, these investments are sensible as they provide housing to low-income or homeless patients, as well as patients with mental health issues or other special care requirements. These investments can also help make treatment more effective as these projects can serve as an ecosystem to help these patients. So not only can the company profit directly from these investments if they are successful, but they should also help make its core businesses more effective. Further, by investing in affordable housing, UNH gets tax credits. The company was awarded federal tax credits for 15 years in 2013 for its Minnesota housing project.

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