How On-Campus MOB Financing Works in Columbus
Columbus occupies a distinct position in the Midwest medical office market. The metro is anchored by two of Ohio's most dominant health systems, OhioHealth and Ohio State University Wexner Medical Center, both of which have aggressively expanded their ambulatory care footprints across the metro's high-growth suburban corridors over the past decade. On-campus medical office buildings in Columbus are concentrated around these system anchors, with assets either located on hospital campuses directly or immediately adjacent to major OhioHealth or Wexner facilities. These buildings house hospital-affiliated physician groups, employed physicians, imaging and diagnostic services, and surgery centers co-located with inpatient infrastructure. The physical and operational integration with the health system creates a tenant relationship that is categorically different from general commercial office and that distinction is what drives lender pricing.
The on-campus designation is not simply a geographic classification. Lenders underwrite it as a credit event. When a health system operates or guarantees a long-term NNN lease on a building within its own campus, the real estate effectively becomes an extension of the health system's balance sheet. In Columbus, that means the underlying credit of OhioHealth or Wexner, both large, well-capitalized regional systems with strong market positions, flows directly into the financing execution. Life insurance companies and CMBS conduits underwrite to that credit profile first and the real estate second. That inversion of the underwriting hierarchy is what allows on-campus Columbus MOBs to achieve the tightest cap rates and most aggressive loan pricing in the local healthcare real estate sector.
Columbus's population growth, particularly in Dublin, New Albany, Westerville, and adjacent suburban corridors, has kept new supply disciplined. Most new on-campus or health system anchored development in the metro is pre-leased before breaking ground, which means stabilized, fully leased assets with long-term health system tenancy are genuinely competitive to finance. Lender risk appetite across the metro remains constructive, and Columbus continues to attract institutional capital targeting medical office as a preferred property type.
Lender Appetite and Capital Stack for Columbus On-Campus MOB
Life insurance companies represent the most competitive permanent capital source for stabilized on-campus Columbus MOBs with health system credit. For assets anchored by investment-grade or near-investment-grade health system tenants under long-term NNN leases, life company spreads in the current environment are running in the range of 125 to 175 basis points over the 10-year Treasury. With the 10-year Treasury around 4.3 percent in 2026, all-in life company rates on the strongest deals are landing in the mid-to-high 5 percent range. LTV for life company executions typically falls between 60 and 70 percent, with non-recourse structures, 25 to 30 year amortization, and prepayment provisions that are either yield maintenance or declining fixed schedules. Life companies are not aggressive on leverage but they are the clear pricing leader when the credit and lease profile qualify.
CMBS is active for Columbus on-campus transactions at $10 million and above where the health system credit is investment-grade or near-investment-grade. CMBS spreads are running 175 to 250 basis points over the 10-year in the current market, with LTV up to 75 percent on the strongest credit structures. Defeasance is the standard prepayment for CMBS, which matters for sponsors with a defined hold or exit timeline. Regional banks, particularly Huntington National Bank and Fifth Third Bank, are consistently active in Columbus given their established Ohio market relationships and comfort with health system anchored credits. Bank execution in the current market is priced in the range of 150 to 250 basis points over SOFR, with SOFR around 3.6 percent, placing floating-rate bank debt in the mid-to-high 5 percent range depending on structure and leverage. Banks are also the primary execution vehicle for bridge financing ahead of permanent takeout on transitional or lease-up situations. Debt funds compete aggressively in those transitional scenarios where a CMBS or life company execution is the intended takeout.
Underwriting Criteria That Matter in Columbus
Health system lease quality is the first and most determinative underwriting input. Lenders want to see direct leases or guaranties from the operating health system entity, not just affiliated physician group agreements. A lease executed by OhioHealth or Wexner directly, with a corporate guaranty and a remaining term of 10 years or more, is materially different in underwriting than a lease to a physician group subsidiary without system-level credit support. Lenders will pull the health system's financial statements and underwrite to the strength of that obligor. Lease structure matters equally: NNN or absolute net leases with minimal landlord obligation are the target. Gross or modified gross leases increase lender risk calculus around expense exposure.
Building specifications are scrutinized for mission-critical functionality. On-campus MOBs must demonstrate medical-grade HVAC, reinforced floor loads for imaging equipment, hospital-level electrical capacity, and ADA compliance throughout. Lenders will require confirmation that the building is genuinely designed for clinical use, not retrofitted general office space. In Columbus, this means sponsors should be prepared to provide detailed building system documentation, particularly for older assets or those being repositioned. Campus connectivity, either through a physical bridge, underground tunnel, or immediate adjacency with shared infrastructure agreements, is a significant underwriting positive and should be documented clearly in the offering package.
Typical Deal Profile and Timeline
The typical on-campus MOB financing transaction in Columbus falls between $15 million and $60 million for single-asset deals, with portfolio or campus assemblages reaching $100 million or above. Sponsors that lenders are most comfortable with in this market combine institutional-quality asset management experience with documented relationships in the healthcare real estate sector. Pure financial buyers without operating experience in medical office face additional lender scrutiny around property management depth and lease administration competency. Equity capitalization and demonstrated liquidity are table stakes.
A realistic timeline from signed LOI to closing on a stabilized, life company execution is 60 to 90 days, assuming the lease package is clean and building documentation is organized at the outset. CMBS timelines are similar, though the securitization process introduces additional due diligence requirements around lease abstracts and borrower entity structuring. Bank transactions can close faster, in 45 to 60 days in some cases, particularly where the sponsor has an existing banking relationship in the Columbus market. Any transaction involving health system sale-leaseback structuring, where the system is monetizing owned campus real estate, should budget 90 to 120 days given the additional organizational and legal review required on both sides.
Common Execution Pitfalls Specific to Columbus
The first pitfall is misrepresenting campus adjacency. Sponsors sometimes market a building as on-campus when it is functionally off-campus, separated by public roads or lacking any formal campus affiliation agreement. Lenders underwriting to health system credit will confirm campus relationship through title review, easement documentation, and direct confirmation with the health system. If the adjacency is functional but informal, a formal shared-use or access agreement needs to be in place before approaching capital markets.
The second pitfall is incomplete lease abstraction. Columbus health systems, particularly those with large employed physician networks, often have complex sublease and license structures beneath the master lease. If the direct health system lease contains carve-outs, termination rights, or co-tenancy provisions that are buried in exhibits, lenders will find them during due diligence. Sponsors should conduct a full legal review of lease documents before launching a financing process, not after receiving a term sheet.
The third pitfall involves zoning and entitlement assumptions on development deals. Columbus suburban submarkets like Dublin and New Albany have active planning departments and specific zoning overlays for healthcare uses. Sponsors in predevelopment should confirm that use entitlements for clinical and surgical uses are secured before committing to a financing timeline. Entitlement delays have pushed Columbus construction loan closings well past original projections on more than one health system anchored project.
The fourth pitfall is underestimating the specificity of building system documentation requirements. Life companies and CMBS lenders underwriting on-campus MOBs in Columbus will require third-party property condition assessments that speak directly to medical infrastructure, not just standard commercial building systems. A generic PCA that does not address HVAC redundancy, electrical capacity for imaging loads, or floor load ratings will trigger a supplemental report request that adds three to four weeks to the process.
If you have an on-campus medical office building deal under contract or in predevelopment in Columbus or across Ohio, CLS CRE has direct capital markets relationships with life companies, CMBS conduits, regional banks, and debt funds that are active in this specific product type. Our national healthcare real estate track record covers single-asset acquisitions, portfolio transactions, and health system sale-leaseback structures. Contact Trevor Damyan at CLS CRE to discuss execution strategy for your specific deal, including a full review of the on-campus MOB financing program and current market pricing.