The RMR Group Inc. has arranged a new interest-only mortgage totaling approximately $272.1 million for a pair of Cedars-Sinai-anchored medical office buildings on West Third Street in Los Angeles. The financing is secured by 8631 and 8635 W. Third St., two medical office properties located on the campus of Cedars-Sinai Medical Center and directly connected to the hospital via skybridge.
Morgan Stanley and BNP Paribas provided the mortgage financing. The loan carries a floating interest rate priced at one-month Term SOFR plus 180 basis points. It features an initial two-year term and includes three separate one-year extension options, giving the borrower the potential to extend the financing to a total of five years, subject to the loan's conditions.
Proceeds from the new mortgage were used primarily to pay down existing secured debt on the assets. Approximately $267 million of prior mortgage debt scheduled to mature in February 2027 was repaid with the new financing, with the remaining proceeds allocated to fund closing costs associated with the transaction. The structure allows the ownership to address an upcoming maturity well in advance while keeping leverage in place on the assets.
The collateral behind the loan consists of two 11-story medical office buildings totaling roughly 330,000 square feet. In addition to the buildings themselves, two structured parking garages are also included as collateral. The properties are situated on the Cedars-Sinai Medical Center campus, and their direct skybridge connections to the hospital emphasize their integration with one of the area's major healthcare providers.
The portfolio is owned by a joint venture in which the primary owners are private institutional investors. Diversified Healthcare Trust, an RMR client, holds a 20% equity interest in the venture. RMR provides asset and property management services to the joint venture, overseeing the day-to-day management and strategic positioning of the medical office properties on behalf of the ownership group.
On the legal side of the transaction, Hogan Lovells Cadwalader US LLP acted as counsel to the lending group, representing Morgan Stanley and BNP Paribas in documenting and closing the mortgage. Sullivan & Worcester LLP served as counsel to the borrower, advising the joint venture on loan documentation and closing matters. A photo associated with the transaction was credited to ACCO Engineering Services in the original source material.
