TRANSACTION LIFECYCLE
How to Analyze a Commercial Real Estate Offering Memorandum (OM): From Broker Package to Go/No-Go
Key Takeaways
- An offering memorandum is one of three documents an acquisition needs to reconcile, not a source of truth on its own. Offering memorandum analysis means testing every headline figure against the rent roll and the T-12 before it enters a model.
- Extract before you model. Pull a fixed, 28-field extraction schedule (with the basis recorded next to every figure) before opening a pro forma, so you know what the OM actually says instead of what you remember reading.
- Tie every headline number (unit mix, income, expenses, NOI, occupancy) to the document that can prove or disprove it. The reconciliation runs in both directions: OM against rent roll, OM against T-12.
- The OM never wins a conflict with a source document. A contradicted claim becomes a flag with a severity (informational, investigate, or deal-breaker) and a specific follow-up request, not an argument.
- The output of this process is not a model. It is a first-pass verdict (pass, proceed, or needs more information) plus the short list of documents that would resolve what the OM alone cannot.
A commercial real estate offering memorandum (OM) is the broker's marketing package for a property listing. Offering memorandum analysis means extracting every figure it states, tying each one to a source document, rebuilding the numbers it presents favorably, and reaching a pass, proceed, or needs-more-information verdict before you spend on a letter of intent and a due diligence budget. An OM is an advocacy document, not an underwriting source. It is a useful one, but not a neutral one.
This page is the process for the buy-side analyst who has a broker's OM open and thirty to sixty minutes to decide whether the deal deserves a full model. It is not a guide to reading an OM as a passive investor, and it does not teach how NOI is built or how a rent roll is screened. Those have their own pages, linked throughout. What this page owns is the document-level discipline: what to pull, what to test it against, where OMs most often flatter the deal, and how to turn the result into a decision and a request list.
ANALYZE AN OM IN APERS
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What Is an Offering Memorandum, and What Is It Not?
An OM is a document the listing broker builds to market a property to qualified buyers after they sign a confidentiality agreement. It compiles the seller's story about the asset: the pitch, the financials as the seller and broker choose to present them, and the market context that supports the asking price. It is not an audited financial statement, not a neutral appraisal, and not a substitute for the rent roll and the operating statements it summarizes.
OM vs. CIM vs. teaser vs. PPM
Four documents get used interchangeably in conversation and mean different things on paper. Keep them separate, because only one of them is a securities offering document.
| Document | Who produces it | When it appears | What it is for | What it is not |
|---|---|---|---|---|
| Teaser | Listing broker | First, before any confidentiality agreement | Generate inbound interest with the minimum disclosure needed to get a signature on an NDA | A complete financial picture of the property |
| Offering memorandum (OM) | Listing broker | After the buyer signs a confidentiality agreement | Present the full marketing case (story, financials, market context) to a qualified buyer pool | An underwriting source, an audited statement, or a neutral appraisal |
| Confidential information memorandum (CIM) | Broker or investment bank | Often on sales with a significant operating-business component or on entity-level and portfolio sales | The same marketing function as an OM; the term is borrowed from M&A, where it markets an operating business | A functionally different instrument; in CRE the terms OM and CIM are often used interchangeably |
| Private placement memorandum (PPM) | The sponsor's securities counsel | When the acquisition is structured as a securities offering raising LP equity | Disclose the terms, risks, and structure of the investment vehicle in an offering exempt from SEC registration (most often Regulation D Rule 506); the PPM itself is not filed with or reviewed by the SEC (the federal filing is Form D) | A property marketing package. It describes the fund or deal vehicle, not the asset's rent roll and T-12 |
A PPM is a securities offering document for the investment vehicle, governed by the issuer's exemption from SEC registration; it does not replace the property-level analysis this page covers. In CRE the terms OM and CIM are often used interchangeably; "CIM" is borrowed from M&A, where an investment bank uses it to market an operating business, so it tends to appear on sales with a significant operating-business component (for example hotels or seniors housing) or on entity-level and portfolio sales.
What does an OM contain, section by section?
Every OM follows a loose version of the same template. The figure and table below are the page's orientation (the anatomy), not the master checklist; the extraction schedule below carries the actual testing weight.
| OM section | What it typically states | What it is built to do | What to check |
|---|---|---|---|
| Executive summary / investment highlights | The one-page deal story and the asking price | Create urgency and anchor the price before the reader reaches the detail | Every number here must reappear, unchanged, in the sections below. See the tie-out |
| Property description | Site, year built, unit or SF mix, amenities | Establish physical credibility | Unit or SF count against the rent roll total |
| Financial summary / pro forma | Historical and projected NOI, the stated cap rate | Justify the asking price | The basis behind every NOI and cap-rate figure. See institutional vs. broker NOI |
| Rent roll summary | Unit mix, in-place rents, an occupancy snapshot | Show income quality at a glance | The as-of date and a full reconciliation. See rent roll analysis |
| Market overview and comps | Submarket statistics, sales and rent comps | Support the pricing and growth story | Comp dates, basis, and an independent pull |
| Capital improvements / deferred maintenance | Recent capex and any disclosed deficiencies | Pre-empt a retrade on physical condition | Against the PCA once ordered. See third-party reports |
| Photos and site plan | Visual presentation of the asset | Sell the physical property | Nothing numeric; informational only |
| Process page / disclaimer | Bid date, buyer qualifications, broker contact | Control the sale process and limit broker liability | Whether the stated timeline is feasible against your own diligence calendar |
Why is the OM an advocacy document?
The broker and seller are compensated for clearing a sale at the highest defensible price, not for protecting an investment committee from buying at the wrong cap. That incentive, not any individual broker's honesty, is why the OM's numbers lean favorable by default. Institutional vs. broker NOI covers the structural argument in full; this page starts from its conclusion and applies it at the document level.
What Should You Extract From an OM Before You Build Anything?
Pull the same fields in the same order every time, with the basis recorded next to each figure, and flag what is missing. A fixed extraction schedule turns a 60-page OM into a one-page worksheet you can reconcile, and it surfaces gaps (a missing as-of date, an undisclosed debt assumption) before they become a surprise in diligence.
The schedule below runs 28 fields across seven blocks. For every field, record the figure, where it sits in the OM, the basis behind it (as-of date, in-place vs. pro forma, the period covered), what document will verify it, and which page on this site owns the method if you need the deeper treatment.
| Field | Where it sits in the OM | Basis to record | Verify against |
|---|---|---|---|
| Pricing and process | |||
| Asking price / pricing guidance | Executive summary, process page | Firm price vs. "guidance" or "offers invited" | Your first-pass NOI. See the cap rate formula |
| Stated cap rate | Executive summary, financial summary | In-place, pro forma, or stabilized basis | Recomputed on your own NOI. See cap rate decomposition |
| NOI figure | Financial summary | Its period: T-12, annualized T-3, Year 1 pro forma | T-12 operating statement |
| Price per unit or per SF | Executive summary | Derived from the asking price and the stated unit/SF count | Rent roll unit or SF total |
| Call-for-offers date, buyer qualifications, seller conditions | Process page | Hard deadline vs. rolling process | Your own DD and financing timeline |
| Property | |||
| Unit or SF count and mix | Property description | Rentable vs. gross; unit type breakdown | Rent roll, certificate of occupancy |
| Year built and renovation history | Property description | Original construction vs. renovation vintage, by scope | County records, capex ledger once produced |
| Site, zoning, and legal description basics | Property description | Current zoning designation and any variance | Zoning compliance letter. See third-party reports |
| Occupancy | |||
| Physical occupancy | Executive summary, rent roll summary | As-of date, stated explicitly | Rent roll, same as-of date |
| Economic occupancy / collections | Financial summary | Period covered and whether bad debt is netted | T-12 collections line |
| Turnover or lease-up statistics | Property description, market overview | Trailing period and whether it includes the current lease-up push | Rent roll lease-execution dates |
| Income | |||
| GPR basis | Financial summary | In-place vs. market rent | Rent roll contract rents |
| Loss-to-lease | Financial summary | Dollar amount and percent of GPR | Loss-to-lease analysis |
| Concessions | Financial summary, rent roll summary | Disclosed vs. embedded in net rent | Concession modeling |
| Other income lines and recurrence | Financial summary | Which lines are recurring vs. one-time | T-12 other-income detail by month. See ancillary revenue |
| Rent roll summary and its as-of date | Rent roll summary | Date relative to the OM's publication date | Full rent roll. See rent roll deep dive |
| Expenses | |||
| Expense lines and period | Financial summary | T-12, T-3 annualized, or budget | T-12 normalization |
| Management fee: included or not | Financial summary, footnotes | Market-rate fee vs. owner-operated (no fee charged) | T-12 management-fee line |
| Property-tax basis | Financial summary | Current bill vs. reassessment at the sale price | Current tax bill, county assessor |
| Insurance | Financial summary | Current policy vs. a fresh quote at the new basis | Current policy, insurance loss runs |
| Reserves treatment | Financial summary | Included in OpEx, below the line, or omitted | TI, LC, capex and reserves |
| Capital | |||
| Capex history | Property description, capital improvements section | What was done, when, and who paid | Capex ledger, PCA once ordered |
| Deferred maintenance disclosed | Capital improvements section | Seller's own disclosure vs. silence | PCA. See third-party reports |
| Financing and market | |||
| Debt assumptions or indicative quote | Financial summary, process page | Assumable debt terms vs. an indicative lender quote | Loan documents if assumption is offered |
| Sales comps | Market overview | Date, size, and cap-rate basis of each comp | An independent comp pull |
| Rent comps | Market overview | Source and as-of date | Rent comp analysis |
| Submarket statistics and their source | Market overview | Named provider vs. unattributed | Independent market data |
| Tenant concentration, lease expirations, WALT | Market overview, property description (commercial) | Rent-weighted vs. SF-weighted WALT | Lease-by-lease modeling |
The extraction schedule: 28 fields across seven blocks. Record the basis next to every number. An OM that states "NOI: $1.31M" without naming the period has already told you something.
Which OM numbers should you never take at face value?
- A cap rate on pro forma NOI, labeled "current." If the stated cap rate divided into the stated NOI doesn't reproduce the asking price, one of the two numbers is doing work the label doesn't admit.
- An occupancy figure with no as-of date. A number with no date attached is not a fact; it is a claim waiting for a date.
- A "stabilized" label on anything. Stabilized means after a plan executes. Treat it as a projection, not a current condition, until the plan is in evidence.
- Comps with no dates. A comp set without transaction dates is a story, not evidence. See what a cap rate embeds.
How Do You Reconcile the OM, Rent Roll, and T-12?
Tie each headline OM figure to the document that can prove or disprove it. The OM never wins a conflict with a source document; every miss becomes a flag with a severity and a follow-up, not a debate.
| What the OM says | Document to test it against | Pass condition | What a miss usually means |
|---|---|---|---|
| Unit mix and rents | Rent roll (counts, as-of date, rent by unit type) | Counts and rents match within rounding | A stale rent roll, or units taken offline since the as-of date |
| Historical income by line | T-12 revenue by line, not totals | Each line matches, not just the sum | A strong line offsetting a weak one that the total hides |
| Expense lines | T-12 expense lines, mapped to the same categories and period | Category mapping and period align | A line moved between categories to flatter the ratio |
| NOI | T-12 NOI | The OM states every add-back and removal explicitly | An undisclosed add-back inflating NOI above what the T-12 supports |
| Occupancy | Rent roll physical occupancy; T-12 collections | All three tell a consistent story | High stated occupancy with weak collections: a bad-debt problem hiding behind the headline |
| "Other income" | T-12 (recurring vs. one-time) | Every dollar is recurring, or the one-time portion is named | A one-time item inflating the recurring income base |
| Capex history | T-12 capex ledger, later the PCA scope | Disclosed capex matches the ledger | Undisclosed deferred maintenance the PCA will later price |
| Year-1 pro forma | In-place trend, line by line | Growth assumptions are stated, not buried in the total | A pro forma that only works if every line grows at once |
| Comps | An independent comp pull | Dates, basis, and submarket match | Stale or out-of-market comps chosen to support the price |
| Tax and insurance assumptions | Current bill, reassessment risk, a fresh quote | The OM's basis survives a sale-price reassessment | A tax line based on the seller's current (lower) assessment |
The tie-out is framed from the OM's side: each row asks "is this OM statement true," not "how do I normalize this document." Ten rows, each testable against one source and one pass condition.
What do you do when the three documents disagree?
The OM never wins. When the OM, the rent roll, and the T-12 disagree, the source document with the closer tie to the actual transaction (the rent roll for unit-level facts, the T-12 for historical dollars) governs, and the OM's figure becomes a flag. Record the delta, not just the disagreement: a $12,000 gap on a $1.3M NOI is a different finding than a $120,000 one, even though both are technically "contradicted."
| Severity | What it means | Example |
|---|---|---|
| Informational | Noted, doesn't change the verdict | Rent roll is dated two weeks after the OM; counts still match |
| Investigate | Needs a document request before the verdict firms up | Other income includes a line the T-12 doesn't itemize by recurrence |
| Deal-breaker | Changes the price or kills the deal outright | Stated NOI carries a $90,000 one-time insurance recovery as recurring income |
Worked example: the OM claim ledger (synthetic)
A synthetic 132-unit, 1980s garden-style multifamily property is listed at $23,800,000 (about $180,300 per unit). The OM states an in-place NOI of $1,310,000 on a 5.5% cap rate: $1,310,000 ÷ 0.055 = $23,818,182, which reproduces the asking price, so the arithmetic is internally consistent even before anything is checked against a source document. The claim ledger below tests the OM's own statements, not the arithmetic, against the rent roll and T-12 for the same property.
| OM claim | Source checked | Result | Status | Follow-up request |
|---|---|---|---|---|
| 132 units, built 1984, garden-style | County property records | Matches exactly | Verified | None |
| 96% physical occupancy as of September 2026 | Rent roll, same as-of date | Rent roll shows 92%, concentrated in one building | Contradicted | Leasing activity report for the vacant units |
| 132 units at a $1,450 average in-place rent, GPR $2.30M | Rent roll | Two units are a leasing office and a model unit, not rent-paying; GPR on paying units is $2.26M | Contradicted | Unit-by-unit rent roll with status flags |
| In-place NOI $1.31M on a 5.5% cap | T-12 operating statement | T-12 NOI is $1.28M including a $90,000 one-time insurance recovery booked in month 7 (recurring basis $1.19M); the OM carried the recovery as run-rate and also removed $30,000 of actual repair expense to reach $1.31M | Contradicted | The OM's own NOI reconciliation schedule |
| Other income $135,000, described as stable | T-12 other-income detail | $90,000 of the $135,000 is the one-time insurance recovery booked in month 7; recurring ancillary income is $45,000 | Contradicted | 24-month other-income detail by line |
| Property taxes $210,000, stable basis | Current tax bill, county assessor | Current bill reflects the prior assessment; a sale at $23.8M triggers reassessment | Unverifiable (forward-looking) | A fresh tax estimate at the contract price |
| No deferred maintenance; roofs replaced 2021 | OM photos and narrative only; no PCA yet ordered | Cannot confirm scope or quality without inspection | Unverifiable | Order the PCA before removing the DD contingency |
| Three comps at 5.25–5.75% cap, "recent" sales | Independent comp pull | Two of the three comps closed more than twelve months ago; one is a different submarket | Contradicted | An updated, dated comp set from an independent source |
Eight claims tested, one verified, five contradicted, two unverifiable pending a document request. The figure below shows the same breakdown. Property, rents, and sources in this example are synthetic.
A six-line first-pass NOI bridge
This is not an NOI rebuild. See institutional vs. broker NOI for that. It is a quick bridge from the OM's number to a defensible first-pass figure, using only what the claim ledger above already found.
| Line | Amount | Reason |
|---|---|---|
| OM-stated NOI | $1,310,000 | As presented |
| Remove the one-time insurance recovery | −$90,000 | Non-recurring; booked in month 7 of the T-12 |
| Restore actual repair expense the OM removed | −$30,000 | Recurring operating cost shown in the T-12 |
| Reserves not carried in the OM figure | −$33,000 | $250/unit × 132 units (illustrative assumption; use the PCA-based reserve once ordered) |
| Tax reassessment at the contract price | −$80,000 | Pending the fresh estimate; treat as a placeholder, not a final number |
| Occupancy gap (92% actual vs. 96% stated) | −$25,000 | Illustrative partial credit: about a quarter of the ~$90,000 full-gap value (4% × $2.26M GPR), on the view that the trailing T-12 already reflects part of the decline |
| First-pass NOI | $1,052,000 | $1,052,000 ÷ $23,800,000 = 4.42% implied cap |
The OM's stated 5.5% cap and the first-pass 4.42% cap are roughly a 108-basis-point gap. The size of that gap, not the direction, is the finding. See the verdict rubric below.
Where Do OMs Flatter the Deal? Seven Places to Test
OMs flatter a deal in the projections, the basis labels, and what they leave out, rarely in the arithmetic itself. The seven places below are where that happens most often, each with a test and one link rather than a full re-teach; two of them overlap with T-12 manipulation tactics already covered on the T-12 page, noted where that applies.
| Place | Symptom in the OM | Test |
|---|---|---|
| Pro forma rent growth | Year-1 pro forma assumes rent growth well above the in-place trend | Compare against loss-to-lease and the actual in-place trend |
| Expense under-reporting | An expense ratio that looks unusually efficient for the asset class | Line-by-line against the T-12, not the total |
| One-time and non-recurring income | "Other income" grew sharply in the most recent period | Check recurrence in the T-12 month by month |
| Below-the-line items | Reserves, capex, or TI/LC sit below NOI, inflating the reported figure | Confirm where each item sits relative to NOI, not just whether it's disclosed |
| Stale or cherry-picked comps | Comps support the price but lack consistent dates or basis | Check dates, size, basis, and run an independent pull |
| Tenant concentration hidden in averages | A healthy headline WALT masks a rollover cluster | Check the expiration schedule directly, not the WALT summary number |
| Deferred capex and concession burn-off | Capex looks current; concessions understate the effective rent gap | Test against the PCA scope later and the effective rent now |
1. Pro forma rent growth
A Year-1 pro forma that assumes 6% rent growth on a market trending at 3% is a projection wearing the costume of a fact. Test it against the loss-to-lease gap and the operating drivers that would actually have to move. Deep dive: operating cash-flow drivers, loss-to-lease analysis.
2. Expense under-reporting
An expense ratio a few points below the asset class's typical range is possible but should earn a line-by-line check against the T-12, not a pass on the strength of the total. Deep dive: T-12 normalization.
3. One-time and non-recurring income
Other income is a common place for a one-time item (an insurance recovery, a lease termination fee, a legal settlement) booked in the trailing period and presented as run-rate.Deep dive: ancillary revenue.
4. Below-the-line items
Reserves, capex, and TI/LC that sit below the NOI line make NOI look larger without changing the property's actual cash needs. Confirm where each item sits relative to the line, not just that it appears somewhere in the OM. Deep dive: TI, LC, capex and reserves.
5. Stale or cherry-picked comps
A comp set chosen to support the asking price, rather than to represent the market, is easy to check and easy to miss if you never pull your own set.Deep dive: rent comp analysis, what a cap rate embeds.
6. Tenant concentration and rollover hidden in averages
A WALT of 5.2 years can describe a property with evenly spaced rollover or one with 60% of rent expiring in a single year and the rest on long leases. The average tells you nothing about the shape.Deep dive: lease-by-lease modeling, renewal probability.
7. Deferred capex and concession burn-off
Capex that "looks current" in an OM narrative and a concession package that hasn't fully burned off both understate what the buyer actually inherits. Test the first against the PCA once it's ordered and the second against today's effective rent, not the contract rent. Deep dive: concession modeling, third-party reports.
Items 2 and 3 above overlap with the T-12 page's own manipulation-tactics catalogue; where they do, treat this page's version as the OM-level pointer and the T-12 page as the full method.
How Do You Turn an OM Into a First-Pass Go/No-Go?
A first-pass OM review ends in one of three outcomes (pass, proceed, or needs more information), each with a stated reason, and for the third, a request list. None of the tests below use a fixed numeric threshold; thresholds are firm-specific, and a page that invents one is guessing on your behalf.
| Test | What you compute or check | How it moves the verdict |
|---|---|---|
| Price vs. first-pass NOI | The implied cap on your own first-pass NOI against your required going-in | A wide miss against your own threshold moves straight to pass |
| Basis gap | OM-stated cap vs. your first-pass cap | The size of the gap is the finding. See institutional vs. broker NOI for how that gap is typically discussed |
| Tie-out result | Count of contradicted claims by severity: informational, investigate, deal-breaker | Any deal-breaker caps the verdict at needs-more-information until resolved |
| Basis sanity | Price vs. replacement cost | A price well above replacement cost raises the bar on everything else. See replacement cost analysis |
| Thesis dependency | Does the deal only work on the OM's pro forma growth, not the in-place trend? | A thesis that only works on the OM's own pro forma, and not on the in-place trend, pushes toward pass unless you can independently support the growth assumptions |
| Process fit | Bid date feasibility, information gaps, seller conditions | A process that doesn't allow time to resolve open items pushes toward pass or a conditioned bid |
Verdict template
For the synthetic property above: five of eight claims contradicted, a roughly 108-basis-point basis gap between the OM's stated cap and the first-pass cap, no PCA ordered, and an open tax-reassessment question.Verdict: needs more information. The basis gap alone does not decide the verdict (whether a gap of this size is worth underwriting further depends on your firm's required going-in cap), but the unordered PCA and the unresolved tax estimate are both inputs the next step cannot proceed without. The request list below becomes the next action, not a pass.
When does the OM verdict turn into a screening model?
A proceed verdict is the handoff point. The model picks up exactly where this page's first-pass NOI bridge stops. Apers' 20-minute deal screener is built for that handoff; a dedicated spoke on initial underwriting will cover the model build itself once it ships.
What Should You Ask the Broker for Next?
The request list targets exactly what you could not verify from the OM alone, ordered to kill a bad deal as fast as possible rather than to collect everything at once.
| Document | Why you need it | Which claim it settles |
|---|---|---|
| Trailing 12- and 24-month operating statements, by month | Confirms recurrence of every income and expense line | NOI, other income, expense basis |
| Current rent roll with lease dates and concessions | The only source for unit-level fact | Unit mix, occupancy, concession exposure |
| Tax bill and assessment history | Establishes the reassessment risk at the contract price | Tax basis |
| Insurance loss runs and current policy | Prices the real insurance cost, not the seller's legacy rate | Insurance basis |
| Capex ledger | Dates and costs what the seller has actually done | Capital history, deferred maintenance disclosure |
| Any third-party reports and prior appraisals | May already answer physical and valuation questions | Condition, basis sanity. See third-party reports |
| Service contracts | Flags assumable or cancelable obligations | Operating cost continuity |
| Seller's debt documents, if assumption is offered | Confirms the terms actually transfer | Financing assumptions |
Request the items that settle a deal-breaker first. Once the broker responds, the request list becomes the opening checklist for full due diligence, including third-party reports and legal diligence.
What Should You Scrutinize First, by Asset Class?
| Asset class | Attack this OM claim first | Why |
|---|---|---|
| Multifamily | Concessions, loss-to-lease, other income, renovation premium | These lines move the most between an OM's presentation and the T-12's actuals. See multifamily underwriting fundamentals, value-add renovation premium |
| Office | Effective vs. face rent, TI/LC, free rent, rollover | Face rent can overstate the economics once concessions are netted. See office underwriting |
| Retail | Anchor and co-tenancy exposure, outparcel and ground-lease credit | A single anchor departure can trigger co-tenancy clauses across the rent roll. See retail underwriting, pad sites and outparcels |
| Industrial | Clear heights, dock doors, rollover, rent mark-to-market | Functional specs drive rentability more than the headline occupancy figure. See industrial underwriting |
How Long Should OM Analysis Take?
Anchor the estimate to figures already established on Apers' own pages rather than a new, unsourced claim. A teaser triage is framed as roughly twenty minutes on the screener page; a full rent-roll analysis is framed as about 2.5 hours on the rent-roll page. OM analysis sits between the two and depends heavily on document quality. Missing fields in the extraction schedule are themselves a finding, and chasing them down is where the time variance comes from.
Analyze an OM in Apers
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Apers extracts the schedule above from an uploaded OM and runs the tie-out against the rent roll and T-12 automatically. The analyst still owns the verdict. Start your OM analysis →
How document intelligence works →·The underwriting workflow →
Related Articles
- NOI: Institutional vs. Broker Calculation: the structural argument behind why broker NOI needs rebuilding, applied here at the document level.
- Rent Roll Deep Dive: Red Flags and Reconciliation: the full method behind one half of the tie-out.
- Operating Statement Normalization and T-12 Adjustments: the full method behind the other half.
- Institutional Due Diligence Checklist by Asset Class: what happens after the request list above gets a response.
- How to Audit a Real Estate Financial Model: the next checkpoint once a deal clears this page and reaches a model.
- How to Write a Real Estate Investment Committee Memo: what comes after the OM verdict and the model: the document that carries this page's findings to IC.
FAQ
Frequently Asked Questions
What is an offering memorandum in commercial real estate?
An offering memorandum (OM) is the marketing document a listing broker prepares to present a commercial property to qualified buyers after they sign a confidentiality agreement. It compiles the property description, a financial summary, a rent roll snapshot, and market context to support the asking price. An OM is an advocacy document built to sell the property at the best defensible price, not a neutral underwriting source.
How do you analyze an offering memorandum?
Extract a fixed set of fields from the OM with the basis recorded next to each one, then tie every headline figure to the rent roll and T-12 operating statement to confirm or contradict it. Flag each contradicted claim with a severity, identify where the OM's projections or omissions flatter the deal, and reach a pass, proceed, or needs-more-information verdict backed by a specific list of documents to request next.
How long should offering memorandum analysis take?
It depends heavily on document quality. A teaser triage runs roughly twenty minutes on a standardized screener. A full rent roll analysis runs about 2.5 hours for an experienced analyst with clean data. OM analysis sits between those two benchmarks: extracting the schedule and running the tie-out is fast when the OM is complete, and slower when fields are missing or dated inconsistently, since chasing those gaps down is itself part of the analysis.
Which should you trust, the OM or the T-12?
The T-12 and the rent roll, not the OM. The OM is a sales document assembled to support the asking price; the T-12 and rent roll are the property's own operating records. When the three disagree, the OM's figure becomes a flag to investigate, not a number to carry forward into a model. The source document with the closer tie to the actual transaction governs the reconciliation.
Can you underwrite a deal from the OM alone?
No. An OM alone cannot support a full underwriting because its figures are presented, not verified, and several of the fields a model needs (a detailed rent roll, a line-item T-12, lease-level data) are typically summarized rather than provided in full. Treat the OM as the starting point for a first-pass triage and verdict, and request the underlying documents before building a model you would stand behind at IC.
What is the difference between an OM and a CIM?
A confidential information memorandum (CIM) serves the same marketing function as an offering memorandum, and in CRE the two terms are often used interchangeably. The term is borrowed from M&A, where an investment bank uses a CIM to market an operating business, so it tends to appear on sales with a significant operating-business component or on entity-level and portfolio sales. Treat a CIM as an OM; the analysis process in this article applies to both, adjusted for the additional operating detail a CIM usually includes.
What does "pro forma cap rate" mean in an OM?
A pro forma cap rate divides a projected, forward-looking NOI, rather than the property's actual trailing performance, by the asking price or value. It describes what the cap rate would be if the stated projections come true, not what the property is earning today. Always record which NOI period a stated cap rate is built on, because a pro forma cap rate and an in-place cap rate on the same property can differ by a meaningful margin.
What should you ask the broker after reading the OM?
Request the documents that settle whatever the OM's claims could not verify: trailing 12- and 24-month operating statements by month, a current rent roll with lease dates and concessions, the tax bill and assessment history, insurance loss runs, the capex ledger, and any existing third-party reports or prior appraisals. Order the request by which document would most quickly confirm or kill the deal, not by convenience.
Sources
Public, primary references for the document distinctions and reconciliation discipline used in this page. The rest of this page's claims are either Apers' own process framing or already sourced on the linked internal pages above:
- U.S. SEC Office of Investor Education and Advocacy: Private Placements under Regulation D: the basis for distinguishing a private placement memorandum, a securities offering document exempt from registration, from a property marketing package.
- Corporate Finance Institute: Confidential Information Memorandum (CIM): the standard structure and purpose of a CIM, the M&A definition of a CIM referenced in the document-types table.
- Fannie Mae Multifamily Selling and Servicing Guide, Part II, Ch. 2 (Valuation and Income), Sec. 203.01 Underwritten Net Cash Flow: the general lending-industry practice of documenting and reconciling adjusted operating-statement line items against source records, the same discipline this page applies to the OM.