Strawberry Inc.: How Deep the Related-Party and Medicaid Dependence Really Is

Why This Follow-Up Matters

The main article argued that Strawberry exited 2025 with stronger rent and AFFO, but that the quality of that income stream still has to be judged through operator quality and balance-sheet resilience. This follow-up isolates the most sensitive overlap inside that thesis: related-party tenant exposure on one side, and a heavily Medicaid-based operator payor mix on the other.

This matters because the company itself tells readers that these are core underwriting variables. In the 10-K, Strawberry says it monitors tenant payor mix and whether a tenant is a related party. That is not an outside reading imposed on the filing. It is the company’s own framework for deciding whether rent is high quality.

That is why the year-end picture deserves a separate deep dive. At December 31, 2025, 66 of 143 tenant entities were related parties. Adding up the rent percentages in the related-party lease schedule gets you to 48.9% of total rent. During 2025, rent received from related parties was $70.0 million, or 45.2% of total rental revenue. At the same time, the March 2026 presentation shows an operator payor mix of 78% Medicaid, 5% Medicare, 6% private pay and 11% other. So this is not one issue repeated twice. It is the same risk showing up in two linked places: who runs the facilities, and who ultimately funds their ability to pay rent.

Where the Dependence Really Sits

The figure of 66 can sound more diversified than it really is. The filing makes clear that each facility is leased and operated through a separate tenant entity. That means tenant count is first a count of LLCs, not a count of 66 fully independent credit counterparties. A superficial reading can therefore overstate how much economic diversification the structure actually delivers.

There is some real progress here, but not a full resolution. The absolute number of related-party tenant entities did not increase versus 2024, so their share of the total tenant base fell to 46.2% from 53.2% a year earlier as the portfolio expanded. Cash rent from related parties also edged down, from $71.4 million in 2024 to $70.0 million in 2025, even while total rental revenue rose 32%. That means the company did grow outside the related-party circle. But the dependence is still too close to half the rent base to be treated as a side issue.

The more important point is what the lease book still says. Based on the rent percentages in the related-party schedule, almost half of Strawberry’s rent remains tied to leases with operators affiliated with Moishe Gubin and Michael Blisko. Applied to the company’s reported annualized average base rent of $142.7 million, that points to roughly $69.8 million of annualized rent still sitting with related-party operators. That is not tail exposure. It is a core part of the portfolio.

That table is important because it shows the dependence does not stop at monthly rent. Part of it lives on the balance sheet. The $16.3 million straight-line rent receivable balance reflects rent recognized over the life of the lease before full cash collection. If operator quality weakens, that is one of the first lines likely to be retested. The same is true, in a different way, for the $5.8 million of notes receivable from related parties.

There is another detail the market should not ignore. The company says no allowance was needed to cover potential rent losses at year-end 2025, and in the same note it says that Gubin and Blisko were not guarantors of company or subsidiary debt. In other words, Strawberry has deep operational and informational overlap with a large tenant cohort, but no direct debt backstop from those insiders. That does not automatically make the structure weaker. It does mean investors should judge cash-flow quality on its own terms, not as if there is an external credit support layer sitting behind it.

Medicaid Is the Funding Base, Not Background Noise

In skilled nursing real estate, the operator does not pay rent out of the building alone. The operator pays rent out of facility economics. That is why payor mix is not just a descriptive statistic. It goes to the heart of rent-paying capacity.

The March 2026 presentation shows a very clear picture: 78% Medicaid, 5% Medicare, 6% private pay and 11% other. That is a heavy dependence on a public reimbursement source set outside the REIT and outside the operator, often on a timeline that does not necessarily match inflation in labor and operating costs.

The annual report reinforces that reading in two ways. First, it says tenant revenue is primarily generated from Medicare and Medicaid, and therefore is exposed to regulatory directives, rules and funding changes at the federal and state level, including changes that can arrive with limited notice or inadequate funding. Second, in its own discussion of the factors that influence tenant quality, the company explicitly says that lower reimbursements from Medicare, state healthcare programs and commercial insurers can reduce tenant profitability and Strawberry’s lease rates.

That is the core issue. Strawberry sits in a triple-net lease structure and does not directly bear facility operating costs. But that structure does not eliminate reimbursement risk. It simply routes that risk through the operator’s ability to keep paying rent. If the operator’s operating margin weakens, rent quality weakens with it.

Related Parties Can Help Operationally, But They Do Not Replace a Market Test

The filing describes an interesting duality. On one hand, Strawberry says that as landlord it does not control tenant operations and cannot force tenants to take specific actions. On the other hand, it says that Gubin and Blisko, as controlling members of 66 related tenants and operators, can obtain information and cause those tenants and operators to take actions, including actions related to occupancy.

That is a subtle but critical point. The same proximity can help in periods of stress because it gives management more information, more access and more ability to coordinate. But for exactly that reason, rent collected from a related-party operator is not identical proof of third-party market quality. That does not mean the rent is less real. It means the market test is less clean.

This is where the Medicaid mix matters even more. When almost half the rent base still sits with related-party operators, and those operators are funded primarily by Medicaid, the issue is not ordinary concentration alone. It is concentration where real estate quality, operator quality and public reimbursement quality are all tied together.

Diversification Helps, But It Does Not Break the Overlap

To be fair, this is not a one-operator story or a one-state story. The March 2026 presentation shows a state breakdown with Indiana at 25%, Kentucky at 18%, Illinois at 16%, Tennessee at 13%, Missouri at 12%, Arkansas at 8% and other states at 8%. On the operator side, the same slide shows several meaningful buckets, including Infinity of Indiana at 25%, Hill Valley HC at 18%, Infinity of Tennessee at 13%, Infinity of Illinois at 11%, alongside Reliant Care Management, Tide Group and the remainder of the portfolio.

That diversification matters. It lowers the risk of a single-tenant blow-up. But it does not remove the quality question. Much of the exposure still sits within the same skilled nursing and post-acute ecosystem, which means it still sits inside the same basic dependence on Medicaid reimbursement and operator-level rent coverage. Put differently, there is diversification across buckets, but many of those buckets are still drawing from the same reimbursement well.

That is why the company’s own statement that it wants to reduce dependence on related-party tenants matters so much. It is the right direction. But at year-end 2025 it is still more direction than finished result.

What Has to Improve From Here

• First checkpoint: the related-party share has to keep falling on a rent basis, not just on an entity-count basis.
• Second checkpoint: straight-line rent receivables and notes receivable from related parties need to shrink, or at minimum stay stable without collection stress.
• Third checkpoint: the company has to show that a Medicaid-heavy payor mix is not pressuring tenant rent coverage or lease terms.
• Fourth checkpoint: new leases with unrelated operators need to be signed on terms that are not weaker than leases inside the related-party system.

Conclusion

This is not a story of dependence getting worse in 2025. It is a story of dependence staying large even after a year of growth. That is an important distinction. Strawberry did expand the portfolio, and it did lower the related-party share of the tenant count. But almost half of the rent base still sits with related-party operators, while the operator funding base remains clearly Medicaid-heavy.

That is what makes this issue central to the broader thesis. Anyone reading Strawberry mainly through asset count or top-line growth can miss that the more important question is rent quality: how much of it is truly supported by independent third-party operators, and how much still depends on a closely linked operating ecosystem funded largely by Medicaid.

The bottom line is fairly sharp. Diversification improved, but the core of the rent stream is still too dependent on related-party operators and Medicaid reimbursement to treat this as a risk that is already behind the company.