SCOTTSDALE, AZ-Lenders are uninterested in financing off-campus medical office buildings unless the projects have hospital sponsorship, according to a panel of experts who spoke at the 3rd Annual RealShare Medical Office Buildings conference here at the Four Seasons Resort.
During the closing panel titled “Learn from the Lenders," panelists discussed the availability of debt and equity. Andrew Dow, a shareholder with Winstead PC, moderated the panel, which also included: Brian Jenkins, senior vice president of Savills LLC; Brent Tharp, senior vice president of GE Healthcare Financial Services; and Charlie Williams, founder and CEO of Keystone Capital.
In general, on-campus MOBs are more attractive to both investors and lenders, according to Tharp. He pointed out that on on-campus MOBs are more likely to stay full and able to attract new tenants to backfill vacant space, especially in today's economic climate.
In comparison, off-campus MOBs are more vulnerable – especially those without hospital sponsorship. “A straight off-campus deal is like doing a suburban office deal,” Jenkins explains. “I think that’s how lending institutions will look at you. We start the conversation with the hospital sponsorship.”
Williams admitted that most of life company lenders prefer on-campus deals and shy away from other MOBs deals. “Our comfort zone is on-campus,” he says. “We’ll look at off-campus, but we’re pretty narrowly focused. We’re chasing something that is right down the middle of the road.”
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