Two 11-story medical office towers tucked beside Cedars-Sinai Medical Center just locked in a $272.1 million refinancing loan, replacing debt that was set to come due in February 2027. The buildings at 8631 and 8635 West Third Street total roughly 330,890 square feet and connect directly to the main hospital via a skybridge, putting the new loan at about $823 per square foot of medical office space at the Cedars-Sinai campus.
The RMR Group announced it arranged the interest-only, floating-rate financing on behalf of a joint venture it manages, according to Pulse 2.0. The loan carries an initial two-year term with three one-year extension options and an interest rate of one-month Term SOFR plus 180 basis points. Loan proceeds repaid approximately $267 million in existing mortgage debt and covered closing costs, with Morgan Stanley and BNP Paribas providing the financing.
The new loan exceeds that prior mortgage balance by about $5.1 million, and before accounting for any hedging, a 100-basis-point shift in Term SOFR would move annual interest expense by roughly $2.72 million, according to Capdex. The East Tower at 8631 West Third Street spans 210,190 square feet and dates to 1978, while the West Tower at 8635 West Third Street covers roughly 120,700 square feet, per the same report. The portfolio also includes two structured parking garages serving the campus.
What's Actually Happening Inside the Towers
Cedars-Sinai and its affiliates anchor the portfolio, occupying approximately 60% of the total rentable square footage, per Pulse 2.0's reporting. RMR cited the portfolio's quality, extension flexibility, strong anchor tenancy, and strategic location in discussing the refinancing.
Cedars-Sinai Medical Center itself is a major anchor tenant for the towers.
A Joint Venture With Institutional Backing
The borrowing joint venture is primarily owned by private institutional investors, with Diversified Healthcare Trust holding a 20% equity interest, per Pulse 2.0. DHC is a Nasdaq-listed healthcare REIT managed by RMR. RMR provides asset and property management services for the joint venture, and the deal's legal work involved Hogan Lovells and Cadwalader for the lenders and Sullivan & Worcester representing the borrower.
RMR Group president and CEO Adam Portnoy said the refinancing reflects the portfolio's quality, its extension flexibility, strong anchor tenancy, and the strategic location of the asset, framing it as evidence of RMR's ability to deliver capital solutions, per Pulse 2.0's reporting. RMR, headquartered in Newton, Massachusetts, manages more than $37 billion in assets through a platform of over 800 real estate professionals across more than 30 offices nationwide, focused on commercial real estate, residential real estate, and related businesses. Hoodline previously reported on OPI's Wall Street takeover, describing a proposed Chapter 11 plan and creditor takeover as pending.
Why Hospital-Anchored Office Space Still Draws Capital
Los Angeles carries nearly 61 million square feet of medical office inventory with an overall occupancy rate of approximately 93%, while high construction costs and interest rates are pushing providers toward leasing, according to the Los Angeles Business First.
The refinancing arrives amid a broader wave of Cedars-Sinai real estate activity around Beverly Grove. In March, the hospital system reportedly agreed to pay roughly $270 million for the 340,000-square-foot Beverly Connection retail center near the Cedars-Sinai campus, in a deal conditional on closing, as Hoodline reported in its piece on the Beverly Connection acquisition. The hospital also plans a 10-story biomedical research tower on Alden Drive following demolition of the former Thalians building, part of the same expansion push detailed in Hoodline's report on the new Beverly Grove research tower.
