Why MOB punches above its weight
Medical office tenants, health systems, large practice groups, surgery centers, sign long leases and rarely move. The result is some of the most predictable cash flow in commercial real estate, and lender appetite reflects it. Pricing for stabilized MOB often runs inside conventional office by a meaningful margin.
On-campus MOBs affiliated with a health system command premium pricing because of the captive tenant demand. Off-campus assets are evaluated more on the tenant roster and submarket dynamics.
Typical medical office loan terms
| Loan type | Potential fit |
|---|---|
| Life company permanent | Health-system anchored, long remaining lease terms |
| CMBS conduit | Multi-tenant buildings, non-recourse |
| Bank permanent | Local practices and smaller buildings |
| Bridge (debt fund or bank) | Lease-up or a building being converted to medical use |
| SBA 504 and 7(a) | Practices buying the building they occupy |
Loan proceeds, pricing and terms depend on the property and lender underwriting. Send the property details to discuss financing.
What lenders underwrite on medical office
- Tenant credit and affiliation. A health-system tenant or a practice affiliated with one prices very differently from an independent practice.
- On-campus or off. Proximity to a hospital campus supports renewal odds and lender appetite.
- Lease term and rollover. Weighted average remaining term and the year-by-year expiration schedule drive sizing.
- Buildout. Surgery, imaging and lab space costs more to re-lease, which lenders weigh against the stickiness it creates.
- Ownership structure. Buildings partly owned by physician tenants get a closer look at lease terms.
What to have ready
- Rent roll with lease start and end dates, options and rent steps.
- Tenant information: practice type, health-system affiliation and financials where available.
- TI and leasing cost history and the budget for upcoming rollover.
- Operating statements for the trailing 12 months and two prior years.
Frequently asked questions
Why do lenders like MOBs?
High-credit, long-tenured tenants and consistent cash flow. The risk profile is closer to net-leased industrial than to general office.
How are medical office properties valued differently?
Tenant credit and on-campus affiliation drive valuation as much as the building itself. On-campus assets affiliated with a major health system trade tighter than equivalent off-campus product.