Medical Office Building (MOB) Financing
BancorpOne arranges commercial mortgages for Medical Office Buildings (MOB), ambulatory surgical centers, and healthcare real estate properties. Characterized by high tenant retention, substantial tenant capital investment, and recession-resilient demand, our medical office debt programs deliver aggressive loan terms, non-recourse execution, and long-term fixed rates from life companies, banks, and CMBS conduits.
Indicative Underwriting Matrix
All MOB financing terms depend on tenant clinical specialties, certificate of need (CON) regulatory status, remaining lease duration, and hospital affiliation.
The Superior Fundamentals of Healthcare Real Estate
Medical Office Buildings (MOBs) occupy a uniquely favored position among commercial lenders. Unlike conventional office buildings that suffer from remote-work vacancies and high tenant turnover, healthcare real estate requires physical presence. Outpatient clinical procedures, diagnostic imaging, ambulatory surgeries, and specialized therapies cannot be performed remotely.
Furthermore, physicians and healthcare systems invest heavily in specialized interior buildouts—often $150 to $300+ per square foot for lead-lined imaging suites, surgical grade air handling, and wet plumbing—creating immense tenant retention. Average medical tenant lease renewal rates regularly exceed 85%. BancorpOne acts as a commercial mortgage broker, positioning these superior credit metrics to secure premium debt terms across institutional capital providers.
Key Underwriting Variables in Medical Office Finance
Lenders evaluate medical office properties across specific clinical and legal parameters:
- Hospital System Anchoring: Facilities leased directly to major regional hospital networks or credit-rated health systems command the lowest interest rate spreads.
- Certificate of Need (CON) Regulations: In states with Certificate of Need laws, operating licenses restrict local competition, providing a wide competitive moat that lenders reward.
- Specialized Clinical Use Adaptability: Properties housing multi-specialty practices (cardiology, oncology, orthopedic surgery) provide more durable cash flow than general administrative suites.
- Weighted Average Lease Term (WALT): Institutional lenders seek a remaining WALT of at least 5 to 10 years to align with long-term fixed-rate financing.
Sizing Tenant Improvement and Leasing Capital
Medical office leases frequently demand substantial upfront landlord capital contributions:
Dedicated TI/LC Facilities
BancorpOne structures medical office debt with integrated future-funding holdbacks to finance heavy tenant improvement allowances for incoming clinical tenants without requiring upfront out-of-pocket cash from the sponsor.
Long-Term Lease Alignment
Because medical buildouts are capital-intensive, tenants commit to 10-to-15 year initial lease terms, creating reliable multi-year cash flow that supports conservative debt constants.
Medical Office Submission Package Checklist
To structure a medical office building financing quote, sponsors submit:
- Certified medical rent roll reflecting tenant practice specialties, square footage, and lease expiration dates
- Complete tenant lease agreements, including corporate parent guarantees and renewal options
- Trailing 12-month operating statements and historical property expenses
- Summary of tenant capital investments and description of clinical equipment installations
Frequently Answered Financing Questions
Verified answers to common borrower and broker inquiries regarding loan sizing, guidelines, and execution.
Why do commercial lenders favor medical office over standard commercial office buildings?
Lenders favor medical office buildings because healthcare requires in-person treatment, tenant buildouts are capital-intensive ($150–$300+/SF), and historical tenant retention rates exceed 85%, eliminating the remote-work risks plaguing traditional office properties.
This makes medical office cash flow significantly more durable and predictable over multi-decade cycles.
Explore MOB Loan Options →What loan-to-value is available for a Medical Office Building?
Stabilized medical office buildings typically qualify for 70% to 75% LTV on non-recourse permanent loans, with advance rates up to 80% LTC for acquisitions with heavy tenant improvement programs.
Owner-user physicians acquiring their own clinical facilities can access up to 85%–90% financing through SBA 504 programs.
Size Medical Office Loan →How does BancorpOne assist medical real estate owners?
BancorpOne acts as a commercial mortgage broker, placing MOB debt with life insurance companies, balance-sheet banks, and healthcare credit funds.
We structure flexible tenant improvement draw facilities and secure non-recourse terms that match clinical lease expirations.
Submit MOB Opportunity →