Blog
Bridge Loans for Medical Office Acquisitions
By Jason Taken · Principal
Medical office acquisition bridge — speed to close on specialty assets before long-term DSCR or CMBS takeout.
MOB acquisitions with short due diligence windows often close on bridge at 8.99%–13.5% IO before stabilization. Plan environmental and ADA spend in your hold budget.
Bridge programs · loan process.
MOB bridge — speed vs specialty diligence
MOB acquisitions with short due diligence windows close on bridge at 8.99%–13.5% IO before stabilization. Plan environmental and ADA spend in hold budget.
| Due diligence item | Timeline | Cost range |
|---|---|---|
| Phase I environmental | 2–3 weeks | $2,500–$4,500 |
| ADA survey | 1–2 weeks | $3,000–$8,000 |
| Structural / roof | 2 weeks | $5,000–$15,000 |
| Lease abstract | 1 week | Legal fees |
Bridge-to-DSCR MOB timeline
| Month | Action |
|---|---|
| 0 | Close bridge 7–10 business days |
| 1–6 | Tenant retention / minor TI |
| 6–12 | Stabilize occupancy |
| 12–18 | DSCR or CMBS refi at 5.75%–10.5% |
Bridge programs · loan process · MOB financing guide
MOB due diligence timeline — 45-day close
| Week | Task |
|---|---|
| 1 | LOI + Phase I order |
| 2 | Lease abstract + ADA review |
| 3 | Bridge term sheet — Jaken Finance Group 7–10 days from complete file |
| 4–6 | Close bridge at 8.99%–13.5% IO |
Specialty use requires longer diligence than SFR — plan bridge, not DSCR, at acquisition.
Exit to DSCR on MOB
Stabilized MOB with 10+ year WALT may refi at 5.75%–10.5% and 75%–85% LTV. MOB financing guide · loan process
MOB acquisition timeline vs SFR
| Milestone | SFR hard money | MOB bridge |
|---|---|---|
| Due diligence | 5–7 days | 21–45 days |
| Environmental | Optional | Phase I required |
| Close | 7–10 days | 14–30 days after DD |
| Rate | 8.99%–13.5% IO | 8.99%–13.5% IO |
Short LOI inspection periods on MOB still need parallel environmental and lease review — bridge funds speed, not skipped diligence.
Estoppel certificates — collect before bridge close
Permanent lenders require tenant estoppels confirming rent, term, and no defaults. On MOB bridge acquisitions, order estoppels during diligence — not at refi:
| Estoppel item | Why it matters |
|---|---|
| Base rent + escalations | Confirms pro forma |
| TI allowance remaining | Affects landlord obligation |
| Termination options | Rollover risk |
| Subordination | Affects lender priority |
A tenant claiming unrecorded rent abatement can delay refi 30–60 days. Budget estoppel cost ($500–$1,500 per tenant) in closing expenses.
ADA and medical build-out — holdback sizing
MOB bridge files often include TI holdbacks for compliance work:
| Issue | Typical cost | Timeline |
|---|---|---|
| ADA ramp / restroom | $15K–$45K | 4–8 weeks |
| HIPAA-ready doors / walls | $8K–$20K | 2–4 weeks |
| Medical gas (if procedure suite) | $25K–$80K | 8–12 weeks |
Request the seller’s property condition assessment and prior ADA survey before you size holdback — surprises here are the top reason MOB bridge extensions trigger.
Worked example — MOB bridge with partial vacancy
| Line | Value |
|---|---|
| Purchase | $2,400,000 |
| Occupancy | 75% |
| Bridge at 65% LTV | $1,560,000 |
| Sponsor equity | $900,000 |
| Holdback for suite TI | $110,000 |
| Target lease-up | 6–9 months |
| Exit | DSCR at 75% LTV once 90%+ occupied |
IO carry at 11% on $1.56M runs ~$14,300/mo — model 9 months ($129K) against stabilized NOI gain before you commit.
Lender document package — MOB bridge vs SFR bridge
MOB bridge files require more third-party reports than single-family bridge:
| Document | SFR bridge | MOB bridge |
|---|---|---|
| Phase I environmental | Optional | Required |
| Lease abstract (all tenants) | N/A | Required |
| ADA survey | Rare | Common |
| ALTA survey | Sometimes | Usually |
| Tenant estoppel | Rare | Required at refi — start early |
Submitting an incomplete MOB file is the main reason 7–10 business day bridge quotes stretch to three weeks. Order Phase I and lease abstract on day one of LOI.
Procedure suite licensure — transfer risk on bridge hold
When a tenant operates an ambulatory procedure suite or minor surgery center, state licensure often attaches to the facility operator, not just the lease. If that tenant vacates during your bridge hold, the next operator must reapply — a 90–180 day gap where the suite cannot bill procedures even if base rent continues.
| Suite type | Licensure transfer timeline | Re-tenant cost |
|---|---|---|
| Primary care exam rooms | 30–60 days | $25–$40/sf vanilla TI |
| Outpatient surgery (ASC) | 120–180 days | $120–$180/sf |
| Imaging (MRI/CT) | 90–150 days | Equipment + shielding $800K+ |
Bridge lenders may cap LTV 5%–10% lower on ASC-heavy MOB until tenant estoppels confirm licensure continuity. Request the state facility license number and any change-of-control clauses in the lease before you model a 12-month hold.
Medical waste and sharps — operating compliance spend
MOB landlords inherit common-area compliance even on NNN leases: medical waste pickup contracts, sharps containers in shared loading zones, and HVAC filtration standards for infectious-disease suites. Budget $0.35–$0.75/sf annually in common-area opex during bridge — not recoverable through CAM on day one if the seller left arrears.
A 22,000 sf off-campus MOB with three procedure tenants may carry $12K–$18K/year in shared medical waste and janitorial surcharges. Underwriters subtract that from NOI when sizing bridge extension reserves.
Parking variance — when ratio fails but deal still works
Local zoning often requires 4–5 spaces per 1,000 sf for medical use. A 1980s MOB at 3.2 spaces per 1,000 sf may still cash-flow but appraises at a 10%–15% discount until a variance or shared-parking agreement is recorded.
| Remedy | Cost | Timeline | Lender treatment |
|---|---|---|---|
| Shared parking with adjacent retail | Legal + survey $8K–$15K | 60–90 days | Partial credit if recorded |
| Variance application | $5K–$20K + hearing | 90–180 days | No credit until approved |
| Valet / stacked parking (urban) | Operator contract | 30 days | Case-by-case |
If parking is deficient at acquisition, size bridge LTV on as-is appraised value, not broker pro forma — and plan extension reserves for the variance process. Small-balance commercial loans often cap MOB files where parking fails code without a recorded cure.
Building your MOB capital stack
Medical office bridge loans sit between specialty diligence and speed — you need both a credible exit and a lender who will not treat MOB like generic office. Start with the MOB investor financing guide for acquisition underwriting, then map your hold period against DSCR on medical office net lease if the tenant roster supports long-term debt. Phase I environmental, lease abstract, and parking ratio review should run in parallel with bridge term sheet negotiation — not after LOI expiration. For sub-$2M files, small-balance commercial loans and special-use commercial property financing explain how MOB fits asset-class buckets that banks often decline. When WALT exceeds 10 years and occupancy is documented, model bridge carry against stabilized DSCR at 75%–85% LTV before you commit to extension fees.