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.

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.

Industry reference

How the medical office building sector operates.

Comparable public REITs / operators

DOC (Healthpeak Properties — formerly HCP, $20B+ MOB + life science)
HR (Healthcare Realty Trust — pure-play MOB)
VTR (Ventas — diversified)
GMRE (Global Medical REIT — small-cap)
CHCT (Community Healthcare Trust — small-cap)
MPW (Medical Properties Trust — hospital landlord)

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.