A real estate offering memorandum is a document that is utilized to inform potential prospects about the opportunity of a commercial real estate deal. Potential prospects could be third-party contributors, brokers, investors or real estate agencies.
After a potential prospect reads through an offering memorandum, they ideally should have a thorough understanding of the real estate opportunities size, tax information, location, the legal tender, previous ownership etc. A real estate offering memorandum is an essential tool to convey professionalism and generate interest in potential prospects.
Real estate OMs should contain the aesthetic information and detailed insight into a real estate opportunity. The information should be both accurate and specific.
Real estate offering memorandum can vary in design, content or other specifications. The Cindtoro team has laid out the essential aspects of the memorandum, no matter if you are reading it or creating one in the future.
First Impressions Matter!
Potential investors expect that information will be laid out in a well organized and neat fashion. This can be very difficult to do because there are many factors to get correct including but not limited to: the correct colors, the layout, and the overall presentation are critical to making an excellent first impression to a potential investor.
1 Cover page
It should come as no surprise that the cover page is the first thing anyone will see. Ensuring that it’s well designed well captivates potential readers well also conveying your company’s brand message effectively. If you are just getting started into the world of real estate and you don’t have a brand this would be an excellent opportunity to start building one. The cover page should have your brand colors, logo, property photos, or other attractive aspects of the deal.
2 Content overview/table of contents
People want to understand what they’re going to be reading so including an overview/table of contents at the start of your real estate offering memorandum will give the reader a high-level overview. Of what they are going to read throughout the OM. This will also give them an opportunity to flip to a specific section, which may be important to them.
3 Use high-quality images
Since you are trying to give an overview of an investment opportunity, the use of high-quality professional photography that is strategically placed throughout the offering memorandum is important to keep readers captivated while also making sure their time spent is worthwhile.
4 Facilities map
By having a facilities or amenities map within your real estate offering memorandum. Your listing will appear more interesting and credible as potential investors are able to see the amenities presented in the form of a map.
Using a facilities map, you will be a few steps closer to the potential closing of the deal.
5 Aerial views
People who are looking at real estate opportunities care greatly about the surrounding area. Which is where the inclusion of aerial views come into play. The aerial view will display access to nearby roads, shops, and local businesses in the area.
In the world of commercial real estate showing off of prime location can be incredibly important.
The detailed specifics for creating a great offering memorandum
A commercial real estate offering memorandum needs to be detailed enough so that it keeps investors and other readers well informed throughout the entire decision making process. For an OM to be professional you need to present the information in a clear and concise manner.
Generally speaking the top level categories are things like: property description, financial details, loan terms, and fund details.
Let’s go over some of these specifics that you’ll want to include in an offering memorandum.
Property description
the property description portion of the memorandum should include things like the following:
- property address
- year built
- the current occupancy
- surrounding area
- Repairs
Financial details
- property purchase price
- total capitalization
- preferred return
- projected returns
- acquisition fee
Loan terms
- The loan amount
- Borrower
- Interest rate
- Amortization
- Collateral
Fund Details
- Equity
- Debt
- purchase price
- closing cost
- acquisition fee
- working capital
- front end capex
A real estate offering memorandum should encourage a reader to take action so here’s what you should notice when creating or reading the memorandum.
Confidential disclaimer
As a legal document an offering memorandum needs to have a confidentiality disclaimer stating the credibility and transparency of a real estate deal.
Executive summary
The executive summary will give potential readers or investors an overview of what they will read within the memorandum. Clear simple to understand vocabulary and wording is key here.
Financial information
The details are in the numbers! The financial information should be presented in a well-organized and visually appealing manner for the readers or investors.
Property location information
Commercial real estate is all about location! When you have an excellent piece of real estate to offer in a great location then you should look to highlight that in as many ways as possible. How do you do this?
Look to highlight specific features like: access to services and amenities of the local area. You should also include facts and figures about the community, the transportation and other surrounding pieces that may be of interest to a potential investor.
Strong call to action
At the end of the day a real estate offering memorandum should ideally convert readers into investors! So it should contain a strong clear call to action on what the next steps ideally should be. Show a reader what those next steps look like. by adding your contact details to the relevant pages.
Conclusion
When a commercial real estate offering memorandum is both well organized and aesthetically pleasing while also conveying the most useful information it can be a great sales pitch for potential real estate opportunities. Unfortunately you may not know where to start which is why the Cindtoro team has created an offering memorandum template you can purchase made by our in-house team of professional presentation designers. Buy the template today and start creating your own full color professional looking offering memorandums for you or your company!
Purchase Commercial Real Estate Offering Memorandum Template
