Regional bank backs $19.9M Scottsdale medical office buy

Cushman & Wakefield arranged $19.9 million in acquisition financing on Edwards Professional Park I & II, a Scottsdale medical office property, for Albany Road. Tyler Morss of the firm's Healthcare Capital Markets team handled the debt; the lender, per Connect CRE, is an unnamed regional bank.

The buildings sit at 10752 N. 89th Place and 8952 E. Desert Cove Ave. They total 91,469 square feet. At closing, 91% of that space was leased. The tenant list runs to 47 medical and healthcare-related businesses. Of the occupied square footage, 98.7% is healthcare-dedicated, spanning dentistry, orthopedics, gastroenterology, dermatology, behavioral health, physical medicine, infusion therapy and aesthetic medicine.

The rent roll does the underwriting work. 47 tenants across two buildings means no single credit supports the property; it also means the lender is backing a collection of small practices instead of a health-system anchor. At 91% occupancy, the bank is paying for current cash flow, not a future lease-up.

The report does not give the coupon, maturity or loan-to-value. Only the lender type and the asset's condition are public. A regional bank stepping in for a 91% leased medical office portfolio suggests healthcare property debt is available at the smaller end of the market, where conduit lending rarely reaches. It also fits the pattern of relationship lenders writing sub-$20 million acquisition loans while large syndicated credits chase scale.

Albany Road has made 110 investments since 2012, so the borrower is well known. For the lender, the trade-off is plain: a nearly full building covers debt service without a leasing assumption. The 9% vacancy is what a bank accepts when the tenant list is a collection of small practices instead of a health system.