November 22

What is Commercial Real Estate OM?

commercial-real-estate-om-explained

If you work in commercial real estate, you are most likely familiar with the term commercial real estate OM. While many businesses send out marketing flyers and brochures to the public, a strong commercial real estate OM (offering memorandum) can garner interest from qualified prospective investors and lead to a deal.

In this article, we explore what a commercial real estate offering memorandum is, how it is used, and explain how you can improve your own OM.

 

Defining the Offering Memorandum

An OM is an important report that is shared with prospective investors. This report generally gives a thorough overview of the property and the property’s financials.  

 

Here are more specific details on the content of the OM:

  • Building details such as property and location overview, demographics, and management
  • A summary of the property’s past, present, and prospective income and expenses.
  • Financial statements, which include a rent roll, tenant profile, multi-year cash flow projections, and financial metrics
  • Property images, aerial maps, site plans, and stacking plans.
  • A confidentiality agreement

 

Examples of Commercial Real Estate OM

When a commercial real estate owner or developer wants to raise capital and update an existing property or buy a new office building privately, they will make use of a private offering memorandum. 

Typically, a private offering memorandum sent to professional contacts is exempt from federal and state security regulations. However, if you make an OM that is targeted to the general public, you can only send it to accredited investors.

 

How to Improve Your Commercial Real Estate OM

 

Make it readable. 

Your OM needs to be easy to read, straight to the point, and overall it should be engaging. Stick to a simple font and space out the text. The writing should be structured with a clear heading, subheadings, and paragraphs. Stress key points in the writing by boldening text.

 

Present high-quality images. 

One way to engage the reader is by showing them quality, high resolution pictures of properties. A professional photographer can take interior and exterior photos with drone aerials. These types of photos will captivate potential investors.

 

Make the financial details presentable. 

You should not copy and paste your P&L statement from a spreadsheet. Instead, make use of an offering memorandum template. This is a much more professional approach to engage prospective investors. 

 

Have a strong call to action. 

The call to action of an OM is typically written in the form of a confidentiality agreement, or more commonly referred to as the NDA. 

 

Conclusion

When it comes to making a strong commercial real estate OM, you need to have short, snappy text, high-quality property images, and easy-to-read financial information. Once you have those details taken care of, you can start seeking out investors for an offering. It can take a lot of time and effort to make a well-designed OM, but it is worth taking your time to attract serious investors’ attention.

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