Medical Office Refinance: Build the Financial Package

A medical office refinance starts with a clear account of who pays rent, how much the property collects, and what could change before the next loan matures. A busy waiting room does not answer those questions. Neither does a rent roll that leaves out concessions or unpaid balances.

This guide is for owners preparing to replace debt on a medical building, outpatient property, or medical office condominium. Use the commercial refinance review to outline your goal, whether it is replacing a maturing loan, funding improvements, or exploring cash-out. Then build a financial package that supports the request.

Start with the ownership and occupancy structure

Write a short description of the property owner, proposed borrower, and occupants. Identify each legal entity and explain any shared ownership. Include a simple diagram if the physician owners hold the building in one company and operate their practice through another.

These three situations need different explanations:

• Independent landlord: unrelated medical practices pay rent under separate leases.
• Owner-user: the owner’s practice occupies the building, directly or through a related company.
• Mixed occupancy: related businesses and independent tenants share the property.

For related companies, supply separate financial statements and evidence of actual rent transfers. Reconcile rent expense in the practice accounts with income recorded by the property company. Explain unpaid related-party rent or owner contributions rather than blending them into collections.

Flag owner-user occupancy at the outset so the review can determine the financing path. Do not assume that a lease between your own entities makes the request equivalent to an unrelated tenant investment.

Reconcile property income before projecting growth

We recommend a month-by-month operating statement covering the most recent twelve months, plus current year-to-date results. This makes it easier to see when a tenant started paying, a concession ended, or an expense increased. Keep the original accounting reports alongside any summary you prepare.

Show base rent, expense recoveries, other recurring property income, unpaid balances, and operating costs separately. Explain major differences between billed rent and cash received. Note whether the statements use cash or accrual accounting; a billed receivable and a bank deposit are different evidence.

The OCC’s commercial lending handbook distinguishes property income from debt payments and emphasizes reading actual lease obligations when calculating expenses. It also notes that tenant reimbursements can be included in income when the matching costs are included in expenses. A label such as “triple net” is insufficient by itself. OCC commercial real estate lending handbook

For your package, add a reconciliation showing taxes, insurance, utilities, management, maintenance, and amounts recovered from tenants. Keep major capital work in a separate schedule, with its funding source identified. That helps a reviewer distinguish recurring operations from a building improvement project.

Keep two kinds of reimbursement separate

Medical properties create an easy source of confusion: tenant expense reimbursements and healthcare payer reimbursements are different cash streams.

The landlord may collect a tenant’s share of property taxes or common-area costs. The medical practice may collect payments from insurers or patients for services. The latter belongs in the practice’s business records, not in the property’s rent total.

For example, suppose a property records $300,000 in annual base rent, $60,000 in collected expense recoveries, and $140,000 in operating expenses. The arithmetic produces $220,000 before debt payments, capital work, and any further underwriting adjustments. This is a hypothetical illustration, not an approved income figure or loan quote.

If the tenant also reports $2 million in practice revenue, do not add that to the building’s income. If $15,000 of the recoveries remains unpaid, identify the receivable and accounting treatment. Show the cash collected so the reviewer can assess the difference.

Make each lease easy to verify

Prepare a dated rent roll with one line per suite. Include tenant legal name, occupied area, lease expiration, current rent, scheduled increases, concessions, and unpaid balances. Note whether the tenant has taken possession and begun paying.

Attach executed leases and amendments. Create a brief summary for each major tenant that points to the relevant documents:

Lease question	Evidence to organize
Who owes the rent?	Signed lease naming the tenant entity
Who supports that obligation?	Any signed guaranty and its named guarantor
What can change the rent stream?	Renewal, termination, expansion, and assignment provisions
What must the landlord still fund?	Improvement allowances, unfinished work, or concessions
Are there unresolved issues?	Notices, documented disputes, or payment arrangements

A hospital logo on the door does not establish which entity signed the lease or guaranteed payment. Present the documents and identify any missing evidence. If a tenant financial statement is requested, confirm what you can properly obtain and share under the lease and confidentiality arrangements.

Keep patient information out of the package

Use business financial summaries without patient information when discussing a medical tenant’s financial position. Do not send patient names, charts, appointment lists, or individual billing records. A property refinance review should not become an informal transfer of clinical records.

HHS explains that protected health information can include identifiable information about healthcare and its payment. Removing a name alone does not necessarily make a record de-identified. HHS guidance on de-identification

For this package, request aggregate business totals that contain no patient details. Let the practice handle any required privacy review before sharing them. If useful tenant financial information is unavailable, say so rather than substituting sensitive records.

Build a renewal and vacancy plan

Create a lease expiration schedule that extends through the proposed borrowing period. Start with the tenants representing the largest share of rent. Record renewal notice dates and distinguish an executed renewal from a verbal intention to stay.

For a major lease approaching expiration, prepare two budgets: renewal and departure. Estimate downtime, leasing costs, landlord work, and available cash for each. Use property-specific bids or broker input where possible, and label assumptions that still need support.

Medical layouts deserve a practical review. List specialized rooms, plumbing, electrical systems, or equipment that could affect a replacement tenant’s use. Identify who owns removable equipment and who must restore the space under the lease. Do not assume the cost of the current buildout equals its value to the next tenant.

For an older imaging suite, for example, describe whether a new operator could reuse the space or whether conversion would require substantial work. Bring that uncertainty into the cash plan before assuming every available dollar can be taken out at refinance.

Flag property interests and restrictions early

State whether you own the land and building, a condominium unit, or an interest under a ground lease. Include relevant documents already available, along with known consent requirements, transfer restrictions, use limits, or pending assessments.

Ask the lender and appropriate advisers to establish the review needed for that property. A campus agreement, condominium declaration, or ground lease may contain provisions that require closer attention. Avoid assuming that an existing medical use resolves all questions about a future tenant or ownership change.

Keep a short open-items list: issue, supporting document, responsible contact, and next step. This gives unresolved questions a place in the package instead of leaving them scattered across emails.

Send a focused refinance request

Put the property address, current balance, maturity date, and requested financing on the first page. Separate the amount needed to retire debt from desired cash-out or improvement funds. Include known prepayment costs and explain any existing extension discussions.

Organize the supporting files into property operations, leases, ownership, current debt, and planned work. Use consistent dates and explain gaps. The commercial loan document checklist can help organize the broader submission; the loan process outlines the next stages.

Start your medical office refinance review with the facts available today. When ready, submit the commercial financing request and identify the property as medical office, its occupancy structure, and your deadline. The review can establish potential financing paths and further information needed; final proceeds and terms depend on underwriting.