What makes a medical office building (MOB) different from standard office?

MOBs have specialized infrastructure (medical gas, lead shielding, heavy floor loading for imaging, higher HVAC air-change rates), longer lease terms (10-15 years vs 5-7 office), much higher tenant retention (90%+ renewal vs <70% office), counter-cyclical demand, and premium valuations. Tenant credit underwriting differs — health-system anchors trade at premium cap rates; independent physician groups have higher credit risk. Stark Law + Anti-Kickback Statute compliance is required in every lease.

How are on-campus MOBs valued vs off-campus?

On-campus MOBs trade at 50-100 bps cap rate compression vs off-campus comparable buildings — typically 5.0-6.0% on-campus vs 6.5-7.5% off-campus. Drivers: anchor health-system credit, patient referral flow, sky-bridge connectivity, and barrier to entry (no new construction without health-system partnership). Public REITs (DOC, HR) report on/off-campus splits in quarterly filings; on-campus runs ~70% of DOC and HR portfolios.

Which REITs specialize in medical office?

Healthcare Realty Trust (HR) is the largest pure-play MOB REIT (~700 properties post-HTA 2022 merger). Healthpeak Properties (DOC, formerly HCP) is largest by portfolio value with diversified MOB + life science exposure post-Physicians Realty 2024 merger ($20B+ market cap). Ventas (VTR) holds blended MOB + senior + life science. Smaller pure-play exposure: Global Medical REIT (GMRE), Community Healthcare Trust (CHCT). Medical Properties Trust (MPW) focuses on hospital landlord deals — currently distressed post-Steward Health bankruptcy.

Medical Office Building KPIs.

Medical Office Buildings (MOBs) are healthcare-tenant office buildings serving physician practices, ambulatory surgery centers, imaging centers, and outpatient services. Performance is measured in tenant retention (90%+ renewal vs ~65% standard office), proximity to anchor hospital (on-campus commands 50-100 bps cap rate compression), tenant credit (health system vs independent group), and lease term (10-15 year medical leases vs 5-7 office). Counter-cyclical demand + demographic tailwinds drive premium valuations vs traditional office. Comparable REITs: DOC (Healthpeak — diversified medical office + life science), HR (Healthcare Realty — pure-play MOB after 2022 HTA merger), VTR (Ventas), GMRE (Global Medical REIT), CHCT (Community Healthcare Trust). Ilora.ai ingests medical lease abstracts (Stark Law + AKS + HIPAA + exclusivity provisions), tenant credit profiles, CON status, Joint Commission accreditation, and CAM reconciliation worksheets, then benchmarks on-campus premium pricing against Healthpeak (DOC) and Healthcare Realty (HR) peer data.

15 definitions · Sector: COMMERCIAL · Used by Ilora.ai specialist AI agents

NOI: Total revenue minus operating expenses (excludes financing and capital costs). The primary measure of property-level profitability.
Cap Rate: Net Operating Income divided by current property value. Expresses unleveraged annual yield as a percentage.
DSCR: Net Operating Income divided by total annual debt service. Lender-required cushion measure; below 1.0 means NOI cannot cover debt.
LTV: Loan amount divided by property value. Lower LTV = lower lender risk.
OER: Operating expenses divided by gross revenue. Lower is better, but varies by property type (hotels run higher than triple-net retail).
GRM: Property value divided by gross annual rental income. Quick valuation shortcut; less precise than cap rate.
IRR: Annualized return on investment accounting for time value of money across the full hold period.
CoC: Pre-tax annual cash flow divided by total cash invested. Measures the cash yield, not total return.
DCF: Valuation method that projects future cash flows and discounts them to present value at a chosen rate.
TTM: A rolling sum of the most recent 12 months. Smooths seasonality for KPI comparisons.
WALT: Average remaining lease term weighted by rent. Higher WALT = lower rollover risk.
NNN: Triple-net lease — tenant pays base rent plus property taxes, insurance, and maintenance separately.
CAM: Tenant-recoverable expenses for shared building/center upkeep. Often disputed in audits.
TI: Cash allowance from landlord to tenant for build-out. Amortized over lease term.
RSF: Tenant's usable square footage plus a pro-rata share of common areas. The basis for rent calculation.

Sub-types

Sub-types within Medical Office Building.

On-Campus MOB: On hospital campus — premium asset class, often health-system anchored or master-leased.
Off-Campus MOB (Anchored): Off-campus but tied to specific health system / anchor practice.
Off-Campus Multi-Tenant MOB: Independent multi-tenant building — diverse practice mix, broader tenant credit risk.
Single-Tenant Net-Leased MOB: Built-to-suit for single tenant (often health system) with NNN lease.

Amenities & features

7 amenities Ilora.ai tracks for Medical Office Building.

Medical Gas + Suction (O2, Vacuum): Wall-piped medical gas system for procedure rooms; required for ASC + procedure suites.
Gas system maintenance cost
Lead-Shielded Imaging Rooms: X-ray, fluoroscopy, mammography rooms with lead-lined walls.
Imaging room SF
Imaging tenant rent premium
Heavy Floor Loading (MRI/CT): Reinforced floor structure for imaging equipment (5,000-10,000 lb units).
Floor load capacity (psf)
Higher Air-Change Rate HVAC: 6-12 ACH for clinical spaces vs 4-6 ACH standard office; required by FGI Guidelines.
HVAC operating cost per SF
Clinical space SF
Patient Drop-Off Canopy: Covered drive-up entry for patient access; standard MOB amenity.
Patient satisfaction score
On-Site Pharmacy + Lab: Tenant pharmacy + clinical lab (LabCorp/Quest); convenience drives appointment capture.
Pharmacy + lab rent
Cross-tenant referral
Hospital Sky-Bridge Connection: Enclosed sky-bridge to anchor hospital; on-campus MOB premium feature.
Bridge utilization
On-campus cap rate compression

Industry reference

How the medical office building sector operates.

Market segments

Hospital-anchored on-campus
Health-system off-campus network
Independent multi-specialty group
Single-specialty (oncology, ortho, cardiology)
Ambulatory surgery + procedure
Diagnostic imaging + lab
Behavioral health + outpatient mental

Operating models

REIT-owned + leased to operators (DOC, HR, VTR)
Health-system owned + master leased
Physician-owned + operated
Hospital + REIT joint venture
Triple-net master lease to platform operator

Regulatory frameworks

Stark Law (physician self-referral prohibition) — fair market value rent + arms-length terms
Anti-Kickback Statute (AKS) safe harbor compliance
HIPAA Privacy + Security Rule
FGI Guidelines (Facility Guidelines Institute)
Joint Commission accreditation standards
State CON (Certificate of Need) for ASC + imaging
CMS off-site location designation
ADA Title III

Industry organizations

BOMA Medical Office Building Council
Revista Med (medical real estate market data)
AHA (American Hospital Association)
MGMA (Medical Group Management Association)
JLL Healthcare
CBRE Healthcare Capital Markets

Comparable public REITs / operators

DOC (Healthpeak Properties — formerly HCP, $20B+ MOB + life science post Physicians Realty merger)
HR (Healthcare Realty Trust — pure-play MOB after 2022 HTA merger, ~700 properties)
VTR (Ventas — diversified senior + MOB + life science)
GMRE (Global Medical REIT — small-cap MOB)
CHCT (Community Healthcare Trust — small-cap diversified healthcare)
MPW (Medical Properties Trust — hospital landlord, currently distressed)

Documents Ilora.ai ingests

Rent roll with tenant credit overlay (system vs independent)
Lease abstracts (Stark Law + AKS + HIPAA + exclusivity)
CON status + Joint Commission accreditation
T-12 P&L
CAM reconciliation (annual)
On-campus / off-campus designation documentation
Health-system affiliation agreements
Tenant payer mix report
Capital plan + TI reserve schedule
Stark fair-market-value rent study

Industry tools (we integrate with these)

Yardi Healthcare
Revista Med (market data + comp set)
JLL Healthcare
CoStar Healthcare
Definitive Healthcare
Salesforce Health Cloud
Argus Enterprise (Medical)
Visual Lease
Lucernex (lease admin)
Dimensional Healthcare Real Estate

Frequently asked

Common questions about medical office building.

What makes a medical office building (MOB) different from standard office?: MOBs have specialized infrastructure (medical gas, lead shielding, heavy floor loading for imaging, higher HVAC air-change rates), longer lease terms (10-15 years vs 5-7 office), much higher tenant retention (90%+ renewal vs <70% office), counter-cyclical demand, and premium valuations. Tenant credit underwriting differs — health-system anchors trade at premium cap rates; independent physician groups have higher credit risk. Stark Law + Anti-Kickback Statute compliance is required in every lease.
How are on-campus MOBs valued vs off-campus?: On-campus MOBs trade at 50-100 bps cap rate compression vs off-campus comparable buildings — typically 5.0-6.0% on-campus vs 6.5-7.5% off-campus. Drivers: anchor health-system credit, patient referral flow, sky-bridge connectivity, and barrier to entry (no new construction without health-system partnership). Public REITs (DOC, HR) report on/off-campus splits in quarterly filings; on-campus runs ~70% of DOC and HR portfolios.
Which REITs specialize in medical office?: Healthcare Realty Trust (HR) is the largest pure-play MOB REIT (~700 properties post-HTA 2022 merger). Healthpeak Properties (DOC, formerly HCP) is largest by portfolio value with diversified MOB + life science exposure post-Physicians Realty 2024 merger ($20B+ market cap). Ventas (VTR) holds blended MOB + senior + life science. Smaller pure-play exposure: Global Medical REIT (GMRE), Community Healthcare Trust (CHCT). Medical Properties Trust (MPW) focuses on hospital landlord deals — currently distressed post-Steward Health bankruptcy.

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