Ten Essentials of an Offering Memorandum
focusedcre / October 1, 2019
Anyone that’s worked in commercial real estate for more than a minute knows about offering memorandums (OMs). These authoritative documents, when executed correctly, inform prospective investors of the details of a real estate opportunity. The OM should provide all of the information surrounding a property like financial information, location, demographics, and so on. What’s sometime forgotten, is that this document is one of the essential tools for enforcing a company’s brand while also creating interest among investors.
Offering Memorandums Establish Credibility
Prospective investors will seek out excellent opportunities. They also want to know about the organization they’ll be doing business with. The offering memorandum can quickly establish credibility, particularly among investors that may not be familiar with the offeror. It’s important to get this document right, and that’s why it’s best to outsource OM development. An organization that specializes in commercial real estate marketing can guide the creation of the document and ensure that it includes all of the essentials.
Essentials of an Offering Memorandum
In broad strokes, the components of an offering memorandum can be broken down into two categories: aesthetics and details. Both parts are equally important and need to complement each other to create a compelling case for investment. While OMs will vary in content and design, here are ten essentials, split along the categories mentioned above, that should never be skipped.
Make a Good Impression
Investors are drawn to nice-looking materials. The presentation, colors, layout, and even the feel of the paper are all critical to making a first impression that wins over investors. Here are some aesthetic qualities that every OM should include:
Cover Page. National Geographic never skimps on the cover image of their magazine and you shouldn’t either. A well-designed cover attracts readership, establishes your brand, and builds confidence in the offering right from the beginning. Your company logo, brand colors, and a picture of the property should all be included.
Table of Contents. Including a table of contents in an offering memorandum makes it quickly readable. With a quick skim, interested parties will be able to go directly to essential details.
High-quality photos. As the saying goes, a picture is worth a thousand words. Use top quality photographs captured by a professional photographer will portray a property in ways that make it most appealing.
Property Aerial. An aerial perspective of the property reveals the property from a unique angle and can provide details on HVAC or rooftop amenities. However, it also is a great way to emphasize surrounding access roads, retail locations, or complementary businesses. After all, location is everything.
Amenities Map. An amenities map can increase user engagement for your listing. Created in conjunction with a property aerial, it is a balanced combination of design and data that makes a case for a property’s location.
Sweat the Details of An Offering Memorandum
Offering memorandums should be detailed so that a prospective party has all of the information they need to make an investment decision. Here again, it’s prudent to work with a professional marketing company that can ensure all these pieces are included and professionally presented.
Executive summary. Written clearly and concisely, this intro the property should whet the investor’s appetite to read further into the offering memorandum.
Confidentiality disclaimer. Offering memorandums are legal documents and should not be taken lightly. Including the confidentiality disclaimer establishes credibility and shows transparency in your dealings.
Financials. This section should highlight the professionalism of your organization. Financial details should be presented in a nicely designed manner that is easy for the reader to digest.
Location Overview/Research. There’s a reason why your property is an excellent investment opportunity, and you’ll want to highlight that here. Incorporating area demographics, traffic counts, and pedestrian foot traffic, along with other vital facts, should be incorporated into this section. Information should be presented as both text and graphics to maximize reader engagement.
Call-to-action. Ultimately, an offering memorandum should be a revenue generator. Like any good piece of sales material, it should encourage a reader to take the next step. The back cover is a good place for this and should also be the place where you include your corporate contact information.