Medical Office Building (MOB) Expansion Credit Facilities
Healthcare systems, physician groups, and outpatient operators are shifting acute care services from costly hospital inpatient towers to modern outpatient Medical Office Buildings (MOBs) and Ambulatory Surgery Centers (ASCs). Developing and modernizing specialized medical real estate requires heavy capital expenditures for cleanrooms, medical gas infrastructure, reinforced floor loads for MRI equipment, and surgical HVAC filtration. BancorpOne structures customized MOB expansion facilities—combining senior mortgage debt with delayed-draw tenant improvement lines—to fund outpatient healthcare real estate growth.
Indicative Underwriting Matrix
Medical office underwriting requires Certificate of Need (CON) state verification where applicable, clinical licensing reviews, and detailed contractor budgets for medical gas/electrical systems.
Funding Capital-Intensive Clinical Buildouts and Ambulatory Suites
Converting standard commercial office space into modern clinical healthcare suites costs $150 to $350+ per square foot—vastly exceeding typical office tenant improvement allowances. Financing these specialized buildouts through short-term business credit lines strains physician working capital. BancorpOne integrates medical improvement reserves directly into long-term commercial real estate mortgages.
Because physician practices invest substantial capital into specialized clinic buildouts, medical office tenants exhibit industry-leading retention rates exceeding 85% at lease expiration. Our underwriters factor this exceptional tenant stickiness into favorable debt yields and extended interest-only amortization schedules.
- Funds Ambulatory Surgery Centers (ASCs), imaging facilities, dialysis clinics, and specialty dental suites
- Delayed-draw CapEx lines eliminate negative interest carry until medical contractor draws are submitted
- Underwrites long-term (10 to 15-year) medical leases with creditworthy hospital system tenants
- Accommodates physician-owned real estate syndications and sale-leaseback recapitalizations
Healthcare Regulatory Compliance and Certificate of Need Standards
Underwriters review compliance with state Certificate of Need (CON) laws, Stark Law, and anti-kickback statutes governing provider real estate leasing. Facilities housing specialized surgical equipment must meet state Department of Health clinical accreditation standards.
Frequently Answered Financing Questions
Verified answers to common borrower and broker inquiries regarding loan sizing, guidelines, and execution.
Why does medical office financing require higher TI/LC allowances than standard office?
Medical suites require specialized infrastructure like medical gas piping, surgical air filtration, and reinforced lead-lined imaging rooms costing $150-$350/sq ft.
Our MOB expansion facilities provide delayed-draw tranches specifically earmarked to fund these specialized clinical improvements.
Size an MOB Facility →How do lenders view tenant stability in Medical Office Buildings?
MOB tenants have an 85%+ renewal rate because relocation is cost-prohibitive and patients are tied to established clinical locations.
This stickiness makes MOBs one of the lowest-default commercial asset classes, resulting in competitive pricing and flexible terms.
Review MOB Guidelines →