Investors searching office building loans, medical office financing, and office conversion bridge need underwriting that respects vacancy, WALT, and takeout reality — not 2019 office comps.
Jaken Finance Group finances office and medical-office bridge nationwide — all 50 states. Rates: 8.99%–13.5% interest-only, terms 12–24 months. Leverage sits in the 60%–65% band on typical acquisition files.
See the commercial property type matrix · industrial warehouse loans · mixed-use bridge
Office subtypes and bridge fit
| Type | Demand driver | Bridge fit |
|---|---|---|
| Medical office (MOB) | Physician credit, outpatient growth | Stronger than general office |
| Suburban class B/C | Local professional tenants | Moderate — TI heavy |
| CBD tower floors | Credit tenants, long WALT | Selective |
| Flex / creative office | Hybrid industrial adjacency | Overlaps industrial |
| Conversion candidate | Entitled residential / life science | Specialty — CapEx heavy |
Context on conversion economics: DC office-to-residential wave
Purchase vs. value-add vs. conversion
| Scenario | Underwriting basis | Typical leverage |
|---|---|---|
| Stabilized MOB / office | In-place NOI, WALT, tenant credit | 60%–65% LTV |
| Vacancy lease-up + TI | Pro forma rent + TI budget | 58%–63% LTC |
| Floor-by-floor re-tenant | Rollover schedule + CapEx | 55%–62% LTC |
| Office → residential (entitled) | Cost stack + as-completed value | 55%–60% LTC |
Unentitled conversion without a permit path exceeds most 24-month bridge calendars — review when not to use commercial bridge debt on the property-type matrix before you fund demolition.
What lenders review on office bridge
| Input | Why it matters | Red flag |
|---|---|---|
| Occupancy & WALT | Near-term rollover risk | >40% rolling in 18 months |
| Tenant credit / industry | Default probability | Speculative startups only |
| TI / leasing commissions | Cash needed to stabilize | Underfunded lease-up budget |
| Parking ratio | Tenant requirement | Overparked basis, underparked demand |
| Cap rate vs permanent market | Refi math | Negative leverage on day-one refi |
Worked example — suburban medical office lease-up
Sunbelt MSA — 22,000 sf MOB, 62% occupied after specialist departure:
| Line | Amount |
|---|---|
| Purchase | $3,400,000 |
| TI + leasing commissions | $520,000 |
| Interest / carry reserve | $190,000 |
| Total cost | $4,110,000 |
| Bridge at 62% LTC | $2,548,200 |
| Sponsor equity | $1,561,800 |
| Rate | 11.0% IO · 18-month term |
| Lease-up | Two medical tenants · 14 months → 91% occ |
| Stabilized NOI | ~$295,000/yr |
| Exit | Regional bank at 65% LTV on ~$4.0M value |
Physician credit and executed LOIs before the second TI draw keep the file on schedule.
Permanent exits
| Exit | Fit |
|---|---|
| Community / regional bank | Smaller MOB and suburban office |
| Debt fund / private credit | Higher leverage or transitional |
| CMBS | Larger stabilized pools with credit tenants |
| Conversion construction loan | After entitlements — separate product path |
Risks unique to office bridge
- Structural vacancy that lease-up budgets cannot cure
- Work-from-home pressure on general office (less so on MOB)
- TI cost inflation on older HVAC and restrooms
- Conversion entitlement delays past maturity
- Thin buyer pool if exit is a sale in soft MSAs
Medical office vs. general office — why spreads differ
| Medical office | General office | |
|---|---|---|
| Demand | Outpatient / physician sticky | Hybrid work sensitive |
| Tenant improvements | Exam rooms, plumbing, HVAC | Cubes / open plan |
| Typical WALT | Longer when physician-owned | Shorter SME leases |
| Bridge appetite | Stronger | Selective |
MOB files still need parking, elevator, and ADA diligence — but takeout lenders generally prefer physician credit over speculative tech tenancy.
Conversion gate — entitlement before CapEx
Office-to-residential or life-science conversions fail when sponsors fund demolition before permits:
| Gate | Required before major CapEx draws |
|---|---|
| Rezoning / adaptive reuse approval | Yes |
| Building permit for change of use | Yes |
| As-completed appraisal engagement | Yes |
| GC guaranteed max or firm bids | Preferred |
Unentitled “vision” packages belong in equity conversations first — commercial bridge is for defined calendars.
TI budget components lenders expect
| Line | Notes |
|---|---|
| Hard TI | Walls, HVAC zones, restrooms |
| Soft TI | Design, permits |
| Leasing commissions | Per executed leases |
| Free rent / abatement | Model in lease-up cash flow |
| Contingency | 10%+ on older base buildings |
Underwriting mistakes sponsors make
- Using pre-pandemic rent comps without absorbing vacancy
- Skipping rollover schedule analysis on WALT
- Funding conversion CapEx before rezoning / building permits
- Assuming industrial-style 70%–75% LTV will clear on office
- Ignoring capital stack for lobby, elevator, and facade that tenants will not fund
Soft office markets — stress tests lenders run
| Stress | Why |
|---|---|
| +5% vacancy | Absorb one unexpected move-out |
| −10% market rent on renewals | Mark-to-market on rollover |
| +15% TI cost | Labor / material overrun |
| 6-month lease-up slip | Extra IO carry at 8.99%–13.5% |
If the permanent DSCR fails under those stresses, cut purchase price or increase equity before locking the bridge.
Related financing guides
- Mixed-use property bridge loans
- Industrial warehouse property loans
- Retail strip center loans
- Special-use commercial property loans
- Commercial property loans by asset class
Get approved · Commercial real estate financing · Submit scenario · Commercial property calculator · (833) 264-7776
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.