Information Memorandums for Commercial Real Estate Sales

In complex commercial and retail property it is common to use information memorandums (IM) in the marketing and inspection process. As an agent for many years I have seen all types of IM’s and everything from the good to the very bad. The fact is that an IM can assist the sale process and help the inspection process for the agent or salesperson.

The things covered in the IM are accurate and detailed; errors cannot be made. Topics include:

  • Title details
  • Land and Plot details
  • History of the property
  • Recent survey plans
  • Tenant plans of fitout
  • Encumbrances, Rights of Way, and Easements on the title
  • Tenant Mix information and status of any lease or vacancy matters
  • Tenancy Schedule and Lease Information
  • Outgoings history, reconciliation, and budget
  • Pictures of the property today
  • Rental and incentives information
  • Capital Expenditure information
  • Depreciation Schedule of Capital items
  • Orders, Notices, and other obligations on the property
  • Rates and Taxes information
  • Improvements on the property (Structural, Electrical, Mechanical, Hydraulic)
  • Expert consultants reports on specialist matters
  • Environmental and Heritage reports (if applicable)
  • Energy ratings and compliance
  • Sales turnover and MAT (retail shopping centres)
  • Customer visits and numbers (retail)

So the list can go on depending on the complexity and type of property. Importantly the information that is displayed in the information memorandum must be accurate in all detail. Get the property owners to certify its accuracy and approve its use before you send it out to any people making enquiries.

The IM can take many days to compile. It is a lot of work, but it is part of selling a large commercial or retail investment property. If I was the agent marketing the property, I would charge a fee for the IM report compilation. To me the fee should be of the order of $2,000 in the case of a large property and that cost should be a vendor paid item as part of preparing for the sale.

In my view a good IM is just so important to the marketing and sales process. It would not be handed to any person until they had signed a confidentiality agreement.

That is what I think and do about IM’s in commercial and retail real estate. Get some more ideas from my toolbox at http://www.commercial-realestate-training.com/

Author: John Highman

Commercial Real Estate Broker, Coach, Speaker, Author, Broadcaster.