A commercial real estate offering memorandum, page by page.

Descriptions of what an offering memorandum contains are easy to find. What is harder to find is a walk through an actual one explaining what each page is trying to accomplish and what the buyer on the other end is doing while they read it. This is that walk, using a composite multi-tenant retail center — the kind of asset most private-capital OMs are written about.

The asset we are describing

A composite, drawn from deals of this shape rather than any one listing: a 38,000 square foot unanchored retail center in a Southern California suburb. Twelve tenants, two vacancies totalling 4,400 square feet, built 1988, renovated 2019. Priced around eleven million. Rents are meaningfully below what the last two leases signed at.

That last sentence is the deal. Everything in a well-built OM is arranged to make a buyer believe it.

Page 1 — Cover

One photograph of the center, the property name, the city, and the broker's firm mark. Nothing else.

What the buyer is doing: deciding in about two seconds whether this is an asset type and a market they buy in. If they invest in unanchored strip retail in Southern California, they keep going. If they buy industrial in Texas, no cover design in the world helps you.

Where OMs lose it: burying the property under a stock skyline of a city forty miles away, or a firm logo sized larger than the asset.

Page 2 — Executive summary

Price, cap rate, square footage, occupancy, weighted average lease term, year built, and four bullets of thesis. On a well-built OM this page can be read alone and still convey the deal.

What the buyer is doing: running a rough underwrite in their head. Eleven million against 38,000 feet is about $289 per foot. Occupancy at 88%. If the going-in yield is 5.8% and they need a 6.25%, the entire question becomes whether the below-market rent story is real.

This is why the thesis bullets have to be specific. "In-place rents average $1.92/SF NNN; the two leases signed in the last fourteen months were at $2.40 and $2.55" gives a buyer something to test. "Excellent value-add opportunity in a high-growth corridor" gives them nothing and costs you credibility on page two.

Pages 3–4 — Investment highlights

The thesis expanded. For this asset: the mark-to-market on rollover, the fact that two of the twelve leases expire within eighteen months, the traffic count on the primary frontage, and the recent renovation.

What the buyer is doing: looking for the catch. Every buyer assumes there is one, because there usually is. An OM that names the weakness before the buyer finds it — a difficult access point, a short-term anchor, deferred parking-lot work — is dramatically more persuasive than one that gets caught omitting it in diligence.

Page 5 — Property overview

Address, APN, land area, GLA, parking count and ratio, zoning, construction, roof and HVAC age, and the 2019 renovation scope. Dry, factual, and quickly scanned.

What the buyer is doing: checking that nothing here breaks their model. Parking ratio matters enormously for retail — a 4.2 per thousand ratio supports a restaurant use, 3.0 probably does not, and that constrains lease-up on the vacancies.

Pages 6–7 — Site plan and aerial

A drawn site plan with every suite numbered, tenant names in place, and the two vacancies visibly marked. An annotated aerial showing the frontage, the signalized corner, the neighboring uses, and the residential behind.

What the buyer is doing: understanding the physical logic of the center — which suites have the visibility, whether the vacancies are the bad inline spaces at the back, where the traffic enters.

This is the pair of pages most often skipped and among the most valuable. A screenshot of a satellite view with no annotation communicates almost nothing.

Pages 8–9 — Rent roll and lease expiration schedule

The section buyers spend the most time in, by a wide margin. Suite, tenant, size, commencement, expiration, current rent per foot, escalations, options, and reimbursement structure. Then a bar chart of square footage rolling in each of the next five years.

What the buyer is doing: rebuilding your model themselves. They are checking whether the pro forma's mark-to-market is supported by actual expirations inside their hold period. If the below-market leases do not expire for nine years, the value-add thesis is a fiction and they will find that here.

Typeset it properly. This is the page that decides deals and it is routinely pasted in as a spreadsheet screenshot, illegible on the phone where the first read happens.

Pages 10–11 — Financials

Trailing twelve months, and a pro forma with assumptions stated on the page. Reimbursement methodology, vacancy and credit loss, management fee, reserves.

What the buyer is doing: finding the difference between your assumptions and theirs. They will not adopt your pro forma. What they want is a clean enough presentation that they can substitute their own numbers quickly.

Make the boundary between actual and projected unmistakable. Every sophisticated buyer has been handed a blended figure that quietly buried a projection inside a trailing number, and the ones who have been burned are looking for it.

Pages 12–13 — Trade area

A drawn trade-area map with drive-time rings, the demographics that actually matter for this tenant mix, traffic counts on both frontages, and the competing centers within about three miles with their anchors named.

What the buyer is doing: assessing whether the vacancies lease. That is the whole purpose of this section. Median household income within one mile is only interesting insofar as it predicts whether a tenant will sign at $2.50.

Three census figures in a gray box does not do this. Naming the competing centers, their anchors, and their approximate availability does.

Page 14 — The offering process

Call for offers date, what the seller wants in an offer, deposit and diligence expectations, debt assumptions if any, and contacts. Brief and specific.

Page 15 — Disclaimer

Your firm's standard language. Not written by you, not borrowed from another firm.

The pattern underneath

Every page above answers a question the buyer is already asking, in roughly the order they ask it: is this my kind of deal, what does it cost, what is the catch, does the physical asset work, do the leases support the story, do the numbers, will the vacancies lease, and how do I bid.

OMs fail when they are organised around what the broker wants to say rather than what the buyer needs to decide. The team bios and the firm's transaction volume belong at the back, if anywhere.

Common questions

How many pages should a commercial real estate offering memorandum be?

Long enough to answer the buyer's questions and no longer. A single-tenant net-leased asset may need eight to twelve pages. The multi-tenant retail center walked through here runs about fifteen. A large value-add or mixed-use asset can justify thirty or more.

What is the most important page of an offering memorandum?

The executive summary decides whether the rest gets read, but the rent roll is where buyers spend the most time. On a multi-tenant asset the rent roll and lease expiration schedule are where the investment thesis is either supported or exposed.

Should an offering memorandum disclose the property's weaknesses?

Naming a known weakness — difficult access, a short-term anchor, deferred maintenance — is more persuasive than omitting it. Buyers assume a catch exists and will find it in diligence. Being caught omitting it costs credibility at the worst possible moment.

What order should the sections go in?

Follow the order the buyer asks questions in: is this my kind of deal, what does it cost, what is the catch, does the physical asset work, do the leases support the story, do the numbers work, will the vacancies lease, and how do I bid. Team bios go at the back.