Deferred Maintenance Is Quietly Killing Medical Real Estate Deals

The building looks good on the tour. The rent comps check out. The operator’s numbers pencil. But then you dig into the facility report—and everything changes.

Roof nearing end of life. Outdated HVAC. Noncompliant fire suppression. Half a million in deferred maintenance that nobody wanted to talk about up front.

This is happening more and more in medical deals, especially with older MOBs, behavioral health campuses, and repurposed assets. And it’s not just a buyer problem. Lenders are flagging it. Inspectors are catching it. And tenants are using it to rework lease terms at the last minute.

In this market, condition matters. You can’t assume a building’s value based on rent roll alone. If the infrastructure is shot, or upgrades are needed to meet licensing or life safety codes, that’s real money—and it’s hitting valuations hard.

For landlords, this means getting ahead of the issue. Know what’s aging out. Budget for it. Document what’s been updated. For buyers and tenants, it means asking the right questions early and building in capital reserves that match the risk.

Everyone talks about location and cap rate. But right now, what’s behind the walls might matter just as much.

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